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Tuesday, March 04, 2014

QLD store cattle markets yet to improve despite recent rain - monthly percentiles

By Augusto Semmelroth  |  Source: MLA's NLRS, ACU

Key points

  • Queensland cattle markets have posted a small but welcomed recovery after recent rainfall events.
  • Finished cattle prices in line with NSW and Victoria; ranging between their 15th and 40th percentile level.
  • Young cattle markets will need more rain and a revival in restocker confidence to see prices lifting substantially.  

While the average young cattle price in Queensland continues to track below east coast levels, finished cattle prices remain in line with Victoria and NSW. Recent widespread rainfall has seen most cattle categories moving from their 5-10th percentile rank to 15-40th last week.

After a dry start in February, most of the state received much welcomed widespread rains over the past two weeks. With rainfall ranging from 50mm to 200mm across most of the state, this was certainly the best rainfall event seen in central and western Queensland this season.

Although the rains helped to lift market confidence for now, a more significant price recovery is yet to be seen, particularly for young store cattle. Restockers remain very cautious as they wait for more follow up rains, and a clearer and more positive outlook for pasture growth for the next couple of months.

As a result, the average young cattle price in Queensland (EYCI-type cattle) is still below the 300¢/kg cwt mark, which equates to its 4th percentile rank. Conversely, the average Victorian and NSW young cattle price is 323¢/kg cwt (33th percentile) and 312¢/kg cwt (13th percentile). Demand for feeders has been much firmer in the last two weeks. This has seen feeder cattle prices rebounding 20¢, or 13%, to 176¢/kg cwt (36th percentile) during the period.

The remaining finished cattle categories have also recovered around 5% in the last two weeks, which puts them back to their 15-40th percentile level. Heavy steers are still the best priced in historical terms, as supply of heavier grass-fed lines is comparatively tighter.

What are percentiles?

Percentiles (or deciles) provide one way of estimating what may happen in the future by looking at what has happened in the past. A percentile is a measure of how often, historically, prices have fallen above or below a particular price level.

However, it is important to note that percentiles are not a definitive measure of absolute price ranges.  They are just one tool in your market information toolbox, and should be considered in conjunction with the other information you use. Read more about how to interpret percentiles

What does this mean?

Queensland cattle markets remain heavily affected by the still ongoing 2012/13 drought. While February rainfall was slightly above average for many parts of the state, much more rain will be needed to break the dry spell of the last 18 months.

Store cattle continue to lag behind finished lines in both absolute price terms and percentile levels. This is a clear reflection of the ongoing subdued restocker activity and the uncertain carrying capacity scenario in the short to medium term.  

That said, young store cattle are the ones with greater potential upside if we see a more positive finish for the wet season in Queensland. 

Mecardo information is provided to assist in your marketing decisions. It contains a range of data and views on the current market. It is not intended to constitute advice for a specific purpose. Before taking any action in relation to information contained within this report, you should seek advice from a qualified professional. The information is obtained from a variety of sources and neither Mecardo nor Ag Concepts Advisory will be held liable for any loss or damage whatsoever that may arise from the use of information or for any error or mis-statement contained in this report. 

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