Cattle industry surges to a record high but what does it mean for processors?

MONEY is flowing into the cattle industry like never before.

It is all part of a national trend which saw prices surge to an all-time record with the Eastern Young Cattle Indicator hitting 605.75c/kg this week.

At a saleyard level in southern NSW it appears to be boom time and market analysts say “buyers are shifting gears” almost every week.

And Wagga is enjoying a massive financial slice of the action with $130 million worth of cattle going under the hammer at the selling centre since July last year.

Wagga Livestock Marketing Centre (WLMC) general manager Paul Martin confirmed 117,000 cattle had been sold through the saleyards for the financial year so far. 

“This centre is renowned for good returns for the vendor and it is also held in high regard by the buyers and the transport sector,” he said.

Numbers are holding up at the Wagga Livestock Marketing Centre (WLMC) but buying support is coming in fast and strong from northern NSW and Queensland buyers. The draw for the Wagga cattle sale on Monday shows 4467 cattle will sell. 

And export orders – traditionally exclusive to the north of Australia – have been made as far south as Dubbo. Data from Meat and Livestock Australia (MLA) shows the national herd is set to plummet to a 20-year low. This combined with limited cattle that are finished and ready to kill this has put pressure on the processing sector.

In fact, Wagga’s largest employer, Teys, could cut as many as 20 positions on Monday and has flagged a move to reduce kill rates by 200 head a day. 

The plant will drop its input from 1300 head a day to 1100.

“We are working to keep any redundancies to a minimum, and would obviously prefer to see cattle supply remain at high levels but this is beyond our control,” said Teys Australia, corporate affairs general manager Tom Maguire. 

Teys Wagga employs up to 800 workers and contributes about $512 annually to the regional economy.

Riverina commercial and seedstock producer Marc Greening of Injemira Beef Genetics, Book Book says it’s exciting times for producers but admits there is a supply issue.

“The processors are just doing what they have to in regards to supply and opportunity,” he said. 

Mr Greening said there had also been a number of new abattoirs open up – and others expand – within 18 months or so.

He said abattoirs had expanded rapidly and operators were probably taking a bit of a “check” in terms of numbers.

“It is not as dire as what some people are saying,” he said. 

“For me as a producer I don’t see this as a major concern in the short to medium term,” he said.

“For those people who have retained cattle (the high prices) are only positive for the industry.”

“But I would say as soon as the season breaks we will see the supply issue hit.” he said. 

“People who have cattle are in the box seat, and if producers can hold onto cattle and join as many females as possible then that is a good business decision.” Meanwhile, the supply issue – especially the female herd – is impacting on the seed stock industry too.

Stud stock breeders rely on buoyant returns at a commercial level to flow back into their business as producers seek out top genetics.

“I am predicting that bull sales are not going to go through the roof this season, due to lack of supply,” he said.

At a market level the fierce competition between restockers, feedlots and processors seeking cattle to kill clearly evident. 

And Mr Greening said he personally believes the cattle market is going to be driven more and more by the feedlot interest over the next 18 months.

“Whether producers decide to sell feeder cattle or finished cattle will be based on the feedlot price,” he said.

MLA market report Leann Dax is at the Wagga and Wodonga cattle sales each week and has witnessed first hand the spike in prices. 

She said overall prices in southern NSW rallied again this week generally moving another 10c/kg.

“Domestic processors have struggled to go with feedlots, when making purchases, and have been very selective when buying,” she said.

Ms Dax said the market support being felt in the south and at the Wagga centre was coming from major feedlots in Queensland and northern NSW. 

Ms Dax said higher prices had been paid on all categories.

“The big shift this week has been for lean cows,” she said.

“Processors who hot bone have been the market drivers,” she said. 

This week lean European cows topped at 256c (Wodonga) while heavy well finished cows recorded a high of 251c for the week. Plain poorer types of cows also jumped 20c as buyers go in search of lean meat.

Ms Dax said Wagga numbers were holding up well.

“It has a large contingent of buyers which gives producers more exposure to a large array of store orders feedlot buyers and not to mention a large field of export and domestic processors,” she said.

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