The widespread rainfall has dictated farmer chat in the past week, and it continues to be the hot topic as more falls arrive across the country. Forecasts also point to more to come in the next few days, and for the rest of the month for that matter. The rain has been widespread, and while there will be plenty of grain growers cursing the wet, rain at this time of year does generally bolster livestock markets.
The National Livestock Reporting Service’s restocker yearling steer price indicator was at 384¢/kg liveweight on Tuesday, having lifted just shy of 40¢/kg in the past month - the best performing in terms of increase across all the major price indicators. Overnight, that price lifted another 14¢/kg to 398¢/kg. But of all the major indicators (except for the restocker yearling heifer price), restocker steers have been lagging, experiencing the smallest increase year-on-year so far. It is also at one of the biggest discounts to heavy steers since February. We can see from our heavy steer to Eastern Young Cattle Indicator spread chart that the good seasons usually equate to good young cattle premiums.
While most report the rain will be of little assistance to producers in the south who have either already quit their young cattle or will experience limited grass growth at this time of year, those in the north could be looking to capitalise on timely summer falls, and plenty of opportunities. Of the yards recording restocker yearling steer sales in the past week, Roma, Inverell, Blackall and Dalby made up 57% of the throughput, and all reported average prices above the national indicator, with Roma leading the way at 437¢/kg.
We can see from our heavy steer to Eastern Young Cattle Indicator spread chart that the two categories have been trending pretty close together this year, which we last saw in the past non-seasonal major destock phase back around 2015. We can also see, however, that good seasonal conditions equate to a bigger EYCI premium, like 2016-17 and 2021-22.
No two seasons are the same, but 2024 may have been just as tough as 2018-19 for some producers, perhaps just not as widespread. According to the Bureau of Meteorology, pretty much all cattle producing areas excluding southern Victoria, central and northern NSW and the Top End, experienced October rainfall totals in the lowest 10% since 1900. Of course the market still relies on supply and demand, not just the weather for its direction, and we are at a different stage of the herd cycle than we were when rain started to fall in 2020, currently destocking due to high numbers rather than on the back of seasonal conditions.
But it is the most recent big change of weather we have had, and can give us some insight into possible upside. In 2020, the National Young Cattle Indicator opened the year at 461¢/kg. Just six weeks later, it had surged above 700¢/kg, and reached 737¢/kg by mid-March. Food for thought. Looking to more recent conditions, the restocker price also experienced a jump at the start of 2024 after summer rain, lifting from 343¢/kg to 370¢/kg over the holiday season break, peaking at 396¢/kg in February.
Current strong supply will put the brakes on any large upside to young cattle prices despite the rain, but improved seasonal conditions should still push returns for producers higher in the short term and offer new opportunities for sellers and restockers alike.