Over-the-hook indicators realign

Over-the-hook heavy yearling steer indicators in Queensland have been at a discount to NSW and Victoria since late February and have seen greater variability as a result of rainfall impacting supply.

In May, patchy rain exacerbated the lack of slaughter-suitable cattle which saw indicators in Queensland increase. This lead to heavy yearling steer indicators becoming more closely aligned across the eastern states – to be within a 16¢/kg cwt range.

For the majority of 2017, NSW yearling steers have traded at a premium to that of both Queensland and Victoria, averaging 5% and 3% higher, respectively. NSW and Victoria indicators have remained fairly stable this year, fluctuating only within a 15c/kg cwt range since the end of February to current.

Meanwhile, Queensland heavy yearling steers traded within a range of 32¢ and was at times 48¢/kg cwt cheaper than their NSW counterparts.

More recently, the string of dry weeks across most of the country contributed to a rise in cattle supplies last week. This was particularly the case in Queensland, where slaughter reached its highest level for 2017 thus far.  For the week ending the 23^rd of June, 71,640 head were processed in Queensland – 3% higher than the previous week and 9% higher year-on-year. As a result, the heavy yearling steer over-the-hook indicator eased 8¢, settling on 525¢/kg cwt.

NSW heavy yearling steers consigned over-the-hook averaged 546¢, while those in Victoria returned 528¢/kg cwt.

A similar trend has occurred in the saleyards, with the Eastern Young Cattle Indicator slipping to below year-ago levels for the first time since 2014 late last week.

If the below-average winter rainfall forecast in the latest Bureau of Meteorology outlook (detailed here) eventuates, the downward pressure on prices is likely to continue.