15 Jun Export price correction but restockers don’t care
Cattle supplies have continued to tighten in June, with Queensland slaughter moving sharply lower last week. While prices are running hot, there were some worrying signs in export markets and with currency movements.
In the week ending the 5th of June, it looks like Queensland cattle slaughter fell off a cliff. Figure 1 shows that Queensland posted its lowest full week slaughter level since March. The closure of Dinmore for a couple of weeks was likely responsible. Lower slaughter driven by plant closure, is less likely to impact price on the positive side, it could actually see prices fall.
Prices didn’t fall, which suggests the supply of available slaughter stock eased in line with the demand reduction. In Queensland over the hooks indicators all gained ground, with only Cows (512¢/kg cwt) remaining under 600¢/kg cwt.
The rally in export beef prices, as indicated by the 90CL came to a halt last week. Figure 2 shows the 90CL Frozen Cow in our terms losing 53¢ to head back to 763¢/kg swt (Figure 2). The fall was partly driven by the Aussie dollar heading back towards 70¢ but was largely due to a 2.6% fall in US prices.
With US cattle slaughter reportedly back at 95% of the levels of this time last year, all beef prices are on the wane at wholesale. Obviously, this means weaker demand for imported beef and lower prices.
Restockers with grass tend to take little notice of export beef prices, and they, along with domestic processors and feeders helped lift the EYCI a few cents above 750¢/kg cwt.
There is some rain forecast for South East Queensland next week, which will help support young cattle prices. The question is how far export prices can drift before processors start to hurt and cut slaughter rates and over the hooks quotes.
On the weather front over the medium term, things are looking rosy again. Figure 3 shows the Bureau of Meteorology (BOM) three month outlook, and after looking decidedly drier last week, has reverted to previous positive projection.