Heavy steers lift off like a rocket

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Author: Adrian Ladaniwskyj

Another week, another record. The Eastern Young Cattle Indicator notched up a new all-time high, but the more notable news this week was a huge 10% surge in heavy steer prices, which reached an unprecedented 476¢/kg lwt, with restocker steers following the trend, also up 6%.

Slaughter and yardings numbers moved in opposite directions last week, with slaughter dipping 6%, and yardings increasing 7% in contrast.

Slaughter decreased across all states, but the reduction was primarily led by an 18% fall in Victoria, followed up by declines of 6% and 3% in NSW and QLD respectively.

The increase in yardings all came from QLD, where numbers surged 42% on the prior week to 24,488 head, offset by falls in VIC and NSW of 17% and 15% respectively.

The EYCI continues to make strong upward progress, clocking up another all-time record for the week up 11¢(1%) to close at 1,042¢/kg cwt. Eligible cattle yardings were down 12% to 12,271 head, providing support to prices. Roma store prices slipped 12¢ (1%) to 1,002¢/kg, despite yardings falling 33% to 2,700 head, while average Wagga Wagga prices surged to 1,083¢/kg, on the back of yearling steers fetching 1,115¢/kg cwt. Armidale was a standout, notching  up exceptional average prices for 245 yearling steers at 1,305¢/kg cwt.

90CL frozen cow prices strengthened 5¢(<1%) to 822¢/kg swt, again supported by the depreciation in the Australian dollar, however, this was offset by underlying US prices slipping back 1¢ to 270¢/lb. Steiner reports that the softer pricing for imported beef, including from Australia was caused by US domestic beef prices tracking lower, with demand weakening, though not to an extent which is unusual given the time of the year.

The Aussie dollar fell another 0.4% against the US greenback to 0.723US, with the US dollar benefiting from increasing bond interest rates. A recent recovery in iron ore prices late this week may provide support to the aussie into next week.

The week ahead

We have seen significant single week changes in heavy cattle prices before, and often, these are followed by a correction, so some weakness next week wouldn’t come as a surprise as the market consolidates. Overall though, heavy cattle prices lifting sharply is a strong sign that the export demand fundamentals reinforcing elevated young cattle prices are well supported, which will provide confidence to the market in general.