Less than four weeks ago, I penned this column, discussing the potential for a southern herd rebuild to begin in Spring 2025. The caveat I made on this outlook, was the risk of a lack of follow up spring rainfall, delivering the conditions to recover from drought to make this happen.
Markets are beginning to reflect anecdotal evidence of declining producer confidence in the south to invest in stock as that follow up rain fails to eventuate. Recently, we’ve seen two to three examples of forecast falls for the south not delivering in a widespread nature, with water table replenishment and the filling of dams not occurring on a lack of runoff rainfall.
In stark contrast of how quickly a season can change, the question that now becomes apparent, is what does a lack of a southern herd rebuild mean for the market?
A retreat in confidence from the southern producer will influence a pull back in rates paid for light cattle, due to the lack of confidence in grass availability for a trade.
Those with the ability to grow summer grazing crops may be shielded from this impact if the crop can develop properly.
The market may see a sharp uptick in supply of light weight store cattle clashing with a pullback in southern producer confidence – which suggests a more bearish market.
The larger availability of store stock in the south and a lack of weight, will most likely encourage a large buying gallery of northerners at southern weaner sales in 2025/26 for another trade.
Their demand will be key to price performance on the light stock.
A lack of recovery in the season if Spring fails to deliver, means the market in the south will turn to how Autumn 2026 looks. What this means is a lack of weight in feeder cattle and more store type supply
Feeders will continue to play a major role in market performance for the south and like northern producer buyers, feeders participation will be key to price outcomes.
With a lack of weight and supply, southern feedlot buying activity should remain very strong in northern markets as the southerner’s look to secure supply and weight in cattle to transport to southern feedlots.
This will be supportive of northern feeder prices through summer due to the added competition.
Additional competition on the heifers is a very plausible outcome, as feeders look to compete away supply on a lower priced article relative to steers.
Heifer to steer feeder spreads should continue to tighten as feeders cycle out of steers (where possible) into heifers.
The big winners from a lack of a rebuild in the south, due to poor conditions will be slaughter cattle, being supermarket cattle, grass feds and cows.
If the season doesn’t deliver, any supply of stock in the south that have weight and condition will be in high demand from buyers and accordingly prices should be well supported.
The southern processor buyers will should remain in northern markets until a material change in season delivers weight in cattle and the ability to trade stock and build numbers.
Overall, this is supportive of prices for slaughter stock.
A lack of a rebuild in southern Australia in 2025 and the potential for further liquidation of the cow herd, pushes out the timeline to rebuild. As we’ve seen in 2025, prices, despite the dry southern conditions, have been very well supported, which is a big positive from this situation.
Any producer that delivers cattle with weight and condition in southern markets will continue to be rewarded by the market, due to a lack of supply and high demand.
If and when supply challenges really begin to bite, ie the southern market starts running out of cattle, it wouldn’t be out of the question to see southern processors begin trucking northern grainfed finished stock into southern plants to maintain kill chain capacity in larger numbers.
The difficulty of seasonal conditions if a material recovery cannot eventuate suggests bearish confidence levels and therefore reduced demand from the producer in an attempt to attempt a rebuild, without the recovery from drought and importantly, water availability, solidified.
A sharp retraction in the outlook for a spring herd rebuild to occur has begun to influence light cattle prices in southern markets.
Any cattle in southern markets with weight and condition stand to be well supported due a lack of supply and high demand from buyers.
The influence of northern buyers chasing weaners in the 2025/26 weaner sales will be an important supporter of price if their season can continue to remain strong.
Ripley Atkinson's experience in the red meat industry and current role at StoneX developing price risk management tools for Australia’s sheep and cattle sectors ensures he delivers unique, whole of supply chain insights and analysis across key factors such as prices, supply, production and the drivers of the sheep and cattle cycles.
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