Restocker cattle trading at a discount

Restocker cattle have been trading at a discount to feeders since the start of the year, with the spread increasing in recent months.

This week, the Eastern Young Cattle Indicator (EYCI) opened at 458.75¢/kg carcase weight (cwt), back 32¢ on the week prior and 26¢ below year-ago levels. The young cattle market has been largely responsive to rainfall, triggering an element of volatility for indicators in recent months. The intent from restockers to rebuild is evident, however conditions are yet to provide any relief to those looking to rebuild herds. Turning to the Bureau of Meteorology’s climate outlook for June to August, a drier-than-average winter looks set to limit any spike in restocker interest in the short-term.

Restockers will look to manage current stock levels, before re-entering the cattle market, once conditions allow. Restockers have been buying EYCI-eligible cattle at a discount relative to feedlot buyers since May last year, as a result of limited restocker competition. During May, restocker sales accounted for 37% of EYCI-eligible throughput. On average, restocker cattle traded at a 37¢/kg cwt discount compared to feeder cattle during this time, highlighting the underlying demand for feeder suitable cattle.

Last week in Queensland, restockers bought 36% of EYCI eligible cattle through the state’s saleyards, trading at an average discount of 19¢ to feeders. At the beginning of the year, restockers were paying the highest premium for EYCI-eligible cattle in Queensland. However, deteriorating seasonal conditions have seen restockers less active in saleyards, while high numbers of cattle on feed have underpinned the demand for feeder cattle.

NSW restockers last week purchased 48% of the state’s EYCI eligible cattle, at a discount of 41¢ to feeder buyers. NSW feeder cattle, on average, achieved better prices than those sold in Qld (463¢/kg cwt) and Victoria (485¢/kg cwt), at an average of 490¢/kg cwt.

In Victoria, only 11% of the state’s EYCI eligible cattle were purchased by restockers and sold at a 35¢ discount relative to feeder cattle.

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