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Friday, May 15, 2015

Queensland cattle back to February highs but lagging NSW/VIC

By Augusto Semmelroth  |  Source: MLA's NLRS

The surge in cattle slaughter levels in Queensland in the last two weeks was not enough to halt the gradual recovery in cattle prices seen since late March. Most finished cattle categories have rebounded around 12-15% during the period and are now back at the same levels as February’s peak. Yet, despite the record prices, Queensland steers remain 30-40¢ behind their southern counterparts.

Key points:

  • The poor finish for the northern wet season continues to place significant pressure on producers, resulting in ongoing strong turnoff levels.
  • Last week, the Queensland’s weekly cattle slaughter rates surpassed 90,000 head for the first time in history, showing that supply is far from waning in the north.
  • Despite the ongoing headwinds from plentiful supplies, Queensland cattle markets have benefited to the surge in southern prices over the last few weeks.
  • Since late March, steer prices have rebounded 45-60¢, or 12-15%, to 424¢ (medium steers), 437¢ (heavy steers) and 465¢/kg cwt (trade steers).
  • In percentile terms, all finished steer indicators are back towards their 100th percentiles.
  • Robust demand for store cattle from feedlots, on the back of record grainfed steer prices, has also supported firmer feeder steer prices. These are now back above the 250¢/kg lwt mark.
  • Although Queensland cattle prices have rebounded to February’s peak, they are now lagging behind NSW and Victorian markets.
  • For finished steers, discounts are in the order of 30-40¢/kg cwt depending on the weight range, while feeder cattle are 10-20¢/kg lwt cheaper.
  • The price gap between north and south is likely to remain wide in the short-term, especially if seasonal conditions remain favourable in the south and supplies tighten further.
  • That said, strong northern supplies will continue to cap the potential upside for southern markets for the time being. On the flipside, firmer southern prices aren’t expected to ease much in winter, and that should provide a floor to Queensland markets.

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