A narrowing gap between heavy and light steers, a cyclone-induced cattle slaughter slowdown, an update on the mutton market and a look at the latest from the US trade wars, this week's market muster has it all.
The gap between heavy and light steers looks to be reducing. Comparing MLA's heavy and restocker steer indicators, the monthly average gap between the two has steadily fallen month on month. From July 2024 through to December 2024 the gap rose from 13c to 55c, showing strong restocker appetite to trade stock. However, since December 2024, a hot summer has caused the gap to fall about 10c/month, to currently (two weeks into March) sit at only 26c. For Australian beef producers, comparing these two indicators gives an insight into traders' and restockers' appetite for buying a light calf and adding weight for a trade. Comparing historical figures, in September 2023, during the cattle market crash, the gap actually went into negative territory as the cattle prices fell into record lows. During 2022 when the cattle market was at record highs, the gap rose to over 250c, as producers rushed to capitalise on a feed abundance. This gap offers a view of the risk to trade steers, a 26c difference signalling low risk.
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With the ever changing geopolitical chaos that is unfolding in the US, let's take a quick look at the potential outcomes of the proposed tariffs. Firstly, the US has been the major destination for Canadian beef, making up ~70% of Canadian beef exports. From the 2nd of April, US importers will have to pay the 25% tariff on Canadian beef, meaning that beef will be more expensive on US shelves, and thus reducing any competitive advantage the Canadian's had. From there, companies exporting Canadian beef will look for other opportunities. Japan, Mexico and South Korea are the next biggest destinations for Canadian beef. For Australian beef producers this does raise a concern; Japan and South Korea are two of our most important Grain-Fed beef markets, and with Canada having a ready made grain feeding sector - this means Canada is set to test the waters of the global grain-fed beef market, competing with Australian beef.
Cyclone Alfred has reduced processing capacity in Queensland with reports of multiple plants understandably either closed or on reduced shifts. Reviewing NLRS slaughter figures, during the week ending March 7 Queensland cattle slaughter dropped 18% from 76,000 to 62,000, a nearly 14,000 reduction week on week. Expectations are for this to flow into the week ending March 14. No doubt there is the potential for a reduction in yard and grid prices until plants are back up into full operations.
Mutton continues to firm throughout 2025, seeing the daily MLA Mutton Indicator figure close off at 410c on March 12. This is the first time the indicator has been back over the 400c mark in two months. Encouragingly prices have not succumbed to the weight of numbers on offer. In February 2025 2.2m head were slaughtered, the second largest monthly mutton kill in more than 12 months. This is off the back of 2024, which was a record sheep slaughter rate. Strong exports of mutton have underpinned slaughter numbers and subsequently the market. From sheep and lamb producers' perspective, a robust mutton price is always welcomed. Note though with such large swathes of sheep killed, lamb production is expected to take a dip in 2025 and 2026, again leading to a tight supply of kill lambs.
Chinese imports to the US have a 20% tariffs since February 4, 2025.
Mexican and Canadian agricultural imports to the US have a 25% tariffs since February 4, which was pushed to the March 4 and now has been pushed to April 2, 2025.
While there hasn't been an official word on agricultural products imported from other countries, Trump has posted "To the great Farmers of the United States: get ready to start making a lot of agricultural product to be sold INSIDE of the United States. Tariffs will go on external product on April 2nd. Have fun!" alluding to further importation tariffs.
There is a global 25% tariff on all imported steel and aluminium to the US - which Canada and the EU have responded with their own importation tariffs on the US.
The White House has confirmed that it is not granting Australia or any other nation an exemption from tariffs imposed from today.
Australia and the US holds a free Trade Agreement (AUSFTA) which begun on January 1 2005, this included 97% Australia's non-agricultural exports and two-thirds of agricultural products to the United States being duty free.
This is as at March 13, and looks to be an ever changing scenario.
Sources: AuctionsPlus, MLA, USDA, Agriculture and Agri-Food Canada (AAFC), DFAT, ABC
Editor's note: This is the last week Tom will write his weekly muster of all things cattle and sheep markets for APlus News. The AuctionsPlus team and our readers thank him for his insightful articles and wish him all the best in his new endeavours.
Tom Rookyard is the founder of Cactus Commentary.