Tom's Market Muster: Wool rallies and we're on track for feedlot record

Wool market rallies after Chinese stimulus package

The wool market has seen its most significant rise in several months. The AWEX EMI (Eastern Market Indicator) rose this week by 34c to close off at 1139c. This renewed market confidence is directly a result of the Chinese Government stimulus package. The Chinese government cut the amount of cash that banks must hold as reserves, freeing up cash for lending; lowered the minimum mortgage down-payment ratio to 15%, from current 25%, and the government guided commercial banks to reduce the interest rates on existing mortgages by 0.50 percentage points.

90CL hits all-time record

The 90CL indicator (the indicator tracking the importation of trim meat sold into the US) has broken its all-time record - on August 2, 2024, the indicator hit 987c/kg AUD. Correspondingly the processor cow indicator hit its highest point since January 2023, reaching 298.12c/kg lw on August 17.

Mutton volume testing market

Mutton continues to ride the wave down, as large volumes hit the market. I wondered if there was a floor, when prices stabilised at 290c in late September, however across the past seven days the indicator has fallen from 285c to sit at 269c on October 10. NSW hasn't seen a saleyard yarding of sheep less than 200,000 since April this year. While in Victoria, Bendigo has seen its largest sheep yarding this week (13,000) for the calendar year.

Cows and calves remain stable

While steers and heifers have been hitting the market in saleyards and online in large numbers, prices are having significant movements week to week. Cows and calves have quietly been holding their ground. The average prices online on AuctionsPlus for Not Station Mated Cows and calves has only had a $169/head variance across the past four weeks, along with an average clearance of 66%. For just over 2,500 head offered, there is some buyers seeing value and opportunity in cows and calves.

Feedlot industry maintains growth but will it continue?

With the number of cattle on feed across the calendar year on track to break the five million head mark for the first time, a look back at the growth of this industry shows its importance to the beef supply chain. In 2004 Australia, there were 2.8m head through feedlots, 2014 that number reached 3.5m, and as above we are on track to break 5m head this year. Record slaughter numbers from processors suggests that we cannot keep growing at this pace without further infrastructure in the processing sector.

Data courtesy of AWEX, AuctionsPlus, Reuters, MLA.

Tom Rookyard is the General Manager at Ottley Livestock Finance.