Challenging producer sentiment and expectations, particularly in the drought stricken western Queensland, is the latest BOM three month rainfall outlook, which, for some areas where rain is desperately needed, the chance of exceeding median rainfall over the October to December period is as low as 35%. Essentially, this reduces the likelihood of an early start to the northern wet in some of the major cattle producing regions, and the current support from southern markets is likely going to be needed to continue in order to sustain prices.
Given the rainfall outlook, and with indicative eastern states cattle slaughter having been consistently higher than 2012 levels for the entire year, it begs the question, how long will slaughter continue at such rates? And to what extent will reduced supplies have on the market?
The recent cattle market gains, after widespread rain stretching from southern Queensland to Victoria, were eroded somewhat this week in the lighter categories, on the back of increased supplies, with the likes of Dubbo registering its largest yarding on record. The Eastern Young Cattle Indicator lost 8.5¢/kg this week, to close Thursday’s markets on 311.25¢/kg cwt.
The sheep and lamb markets felt the pressure from the surge in supplies, after rain disrupted sales last week. The heavy lamb indicator eased 18¢/kg cwt, to average 440¢/kg cwt, while light lambs lost 11¢/kg cwt to close the week on 370¢/kg cwt. While the latest rainfall outlook for sheep and lamb producers is more optimistic, with a neutral chance of receiving more than median rainfall, the timeliness of rain will be equally as important in supporting markets under the increased supply of new season lambs.