The transparent and simple dynamics of the Auctions system is a great gauge of who holds the balance in a market at any time – be it housing, the share market or Australian cattle market. With too many buyers and too few sellers, both prices and clearance rates should increase – as was the case for cattle prices throughout 2020.
However, the final weeks of 2020 saw an increasing number of buyers baulking at the record high prices, which pushed clearance rates lower & left many sellers deciding to hold onto very highly valued and sort after cattle.
One of the main features of the AuctionsPlus platform is that sellers can clearly state a reserve price for their offered lines, giving them a much simpler logistical outcome, compared to saleyards, if the desired sale price is not reached within the online sale.
The first two weeks of January has clarified what started to look like a stand-off over record high prices in late November and December 2020. That is, the market remains in the court of the sellers, with the opening prices and clearance rates for the first two full weeks of sales in 2021 delivering sustained all-time high prices and increased clearance rates from December. Assisted by patchy, but well received storm rain through the Christmas and New Year period, eastern states buyers started the year re-invigorated to try and fill feed-bursting paddock with very forward weaners.
The AuctionsPlus clearance rates for the first two full trading weeks of 2021 averaged well-above 80%, with the 3,167 steers offered online last week clearing at 93%. This compares to the weekly AuctionsPlus averages for the final four weeks of 2020 at between 70-75%. For 2020, AuctionsPlus recorded 20 weeks of clearance rates exceeding 90%, with the average for the year at 84%.
Identifying the three distinct periods in 2020 of very high clearance rates, as expected, prices also surged. The first period was in February, where the first signs of drought breaking rains started to be recorded. With an average clearance rate of 93% throughout February, AuctionsPlus indicative Angus weaner steer (300-350kg) prices jumped 26% from January, while weaner heifer and cows with calves at foot (CAF) increased 18% and 44%, respectively. For the same period, the EYCI jumped 25%, from an average of 536c/kg cwt in January, to an average of 666c/kg cwt in February.
The second period, largely falling in April and May 2020, saw average AuctionsPlus clearance rates at 89.3%. AuctionsPlus prices throughout this period increased 3% for steers, 7.5% for heifers and 18% for Cows (CAF). The third and final period of 2020 with high clearance rates was for a period which largely spanned August, September, and October. Averaging 90% clearances on a weekly basis, prices in this period jumped 15% for steers, 3% for heifers and 23% for Cows (CAF).
Looking briefly at the few consecutive weeks when AuctionsPlus clearance rates fell below 70% in 2020, prices also softened – albeit this was also in the wake of preceding sharp increase. In early April, clearances dropped to 67% and 61% respectively – although this was also partly due to Easter disruptions. In the final four weeks of 2020, clearance rates fell to between 70-75%, with corresponding cattle prices cooling after the red-hot rise in previous months. For the same four-week period in December, indicative Angus(300-350kg) steer and heifer prices eased back 7% and 8%, respectively from the previous month.
Looking ahead, any further rain through the eastern states for the remainder of summer will only further fuel buyer demand, which will be expected to put pressure on clearance rates. In this scenario, it will be the prices expectation of vendors which will ultimately determine price levels in what remains a sellers’ market in early 2021.