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Thursday, July 02, 2015

Queensland cattle prices at the top...but not really

By Augusto Semmelroth  |  Source: MLA's NLRS

In isolation, the Queensland cattle market looks to be performing exceptionally well with most indicators at, or within whisker of, their all-time highs. Yet, comparing them to their southern counterparts paints a completely different picture of the market. Queensland steer prices remain 80-120¢/kg cwt below NSW and Victorian levels as the drought-induced supply overflow continues to weigh on prices.

Key points:

  • Southern cattle markets have surged since April, with steer prices rallying 120-170¢, or 30-40%, in both NSW and Victoria.
  • During the same period, the equivalent cattle categories in Queensland saw gains capped at around 60-75¢, or 16-18%.
  • Despite the more modest gains, finished cattle steers are now quoted at, or near, their all-time highs.
  • However, the clear discrepancy in the performance of northern and cattle markets has created an unprecedented price gap between the two regions.
  • As of last week, the QLD trade and heavy steer indicators were tracking 100-120¢, or 18-20%, below the equivalent indicators in Victoria and NSW.
  • While finished stock is becoming scarcer in the south as winter progresses, large numbers of cattle continued to be turned off in Queensland to create a supply imbalance between the regions.
  • After the recent rainfall events, buyer demand for young cattle and feeders has picked up substantially to see prices rallying in the last two weeks.
  • That said, recent gains were not sufficient to see Queensland markets bridge the gap to the south. As of last week, young cattle yarded in Queensland were still tracking around 55¢/kg cwt below NSW and Victoria.
  • As opposed to finished steers, Queensland cows are not as heavily discounted to southern prices. Yet, they are still struggling to move above the 400¢/kg cwt mark while strong breeding stock liquidation continues to dampen prices.
  • It may take a few months for Queensland prices to move in line with southern markets. However, the recent market dynamics in NSW and Victoria shed some light onto the potential upside for northern cattle markets at the start of their wet season and in early 2016 should seasonal conditions improve.

Read more about how to interpret percentiles

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