Bullish fundamentals can’t stop trade steer slide in Qld

The fundamental international market news was bullish this week, but markets seemed to focus more on local issues.  Broader indicators managed hold their ground, or even rally a bit, but at the state level there were some heavy price declines.

After a brief decline last week, the 90CL export price rebounded this week as tight supply, and expected tighter imported beef drove US buyers to bid up.  While not quite back to the highs of a fortnight ago, the 90CL rallied 8¢ to 645¢/kg swt.

The other bullish fundamental news was the Indian ban on cattle slaughter, which will obviously take some time to play out.  However, there might have been a reaction of sorts from restockers, who were seemingly the only buying group who paid more.

Restockers pushed the EYCI higher, as shown in figure 1, it gained 4¢ for the week to hit 655.25¢ a five week high.  Cows also rallied, while heavy steers fell.

The interesting numbers came out of the trade steer market.  Figure 2 shows dramatic falls in Queensland and Victorian trade steer indicators, while NSW held steady.  We don’t yet have the yardings for the indicators, but the heavy falls would suggest there weren’t many trade steers sold this week.  This is partially backed up by just a 15¢ fall in the national indicator.  Much less than the 123¢ and 44¢ falls in Queensland and Victoria.

In WA the Western Young Cattle Indicator (WYCI) gained a couple of cents to sit at 650¢/kg cwt.  Figure 3 shows an interesting convergence.  The EYCI, WYCI and 90CL indicator all sitting between 645 and 655¢.  The last time we saw this was in March 2016.

The week ahead

There is no rain on the forecast for the coming week, which is not great for any market upside.  However, we are now in June, and it’s very rare for the market to fall to far at this time of year, as supply tightens.  As such we might spend a few weeks in a holding pattern, at least until it rains, when we might see a rally.