The cattle industry is hopeful rain, which has already started to fall in the north, will make its way into the southern regions, prompting a positive response in the cattle market.
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Jim Hindmarsh and Co principal Jim Hindmarsh said the market had “gone south in a big way over the last 12-months”.
In July, Chinese import authorities imposed temporary bans on packaged meat, because of non-compliant labelling.
“The feedlot industry has really slowed down and the added effect of the Chinese penalising us for a mistake on box marking has put us out of the market for the last six weeks,” Mr Hindmarsh said.
“There’s talk of it coming back in, but at this stage it’s still not happening – that enabled America to get a lot more meat into China.
“This time of the year going into winter in America, they’re killing as much as they can to get their herd numbers down.”
Mr Hindmarsh said the feedlot market had come back between 80 cents and $1 a kilo in 12-months, with the majority of the decline occurring over the last four months.
“The price of grain has gone up and the next thing is the feedlots are effected. We don’t know if there is going to be a grain crop or how big is it going to be,” he said.
“The last couple of years they have had very large grain crops and it’s been ideal. Feedlots have been able to secure all their feed, whereas now they look like finding it hard to get that feed, so the first thing they will do, if they’ve got to pay more money or can’t find grain, is they will discount the price of cattle to counteract the grain price or lack of grain.”
Farmers are crying out for rain. Spring so far has not delivered the much needed boost they require ahead of summer.
“Rain will steady it, but at the end of the day the market is still determined by what they can do with their meat and if they can sell it,” Mr Hindmarsh said.
“Six weeks ago they had meat they couldn’t sell overseas so they put it straight back and dumped it on the Australian market, but that’s business isn’t it, you have got to wear it.
“Since that happened there has been a glut of meat.
“The perfect example is veal, three weeks ago we were getting $5 to $5.30 for veal, because it was so hard to find, now it’s just flowing through the door. I think there was 90 at Moss Vale last week, and close to 60 this week.
“Straight away re-stockers with a bit of crop are buying these little steer calves because they’re not a lot of money, they’re coming in a bidding against the butchers, which is what it’s all about – re-stockers against butchers is always great competition.”
This week, the domestic trade in particular was stronger, as prime vealers are in short supply across most NSW regions, Mr Hindmarsh said it provided a bright side to the market.
“The really top article, which is hard to find at this time of year, is still going really quite well, a really good 330kg vealer is still making $3.50 a kilo, an exceptionally good calf is still making $3.50,” he said.
“Export cattle – bulls and cows – are still holding up remarkably well considering everything else is still coming back.
“They are still after those, because as soon as that switch turns, whether it be China or America, when their supply cuts down, straight away everything is bubbling again.”
Bega cattle buyer and producer Jeff Otton said the current cattle market was at a level which was barely sustainable for producers.
“It has made it very difficult to get buying orders due to people not sure what the market is going to do week to week,” he said.
“Producers aren’t sure whether to buy cattle to grow out for future markets because it keeps falling each week.”
Mr Otton said “a huge rain event was needed to stop the oncoming drought”.
“Maybe the market has stopped falling, a serious rain event across NSW would help the situation,” he said.
“In Bega, we have had only two-millimetres in three months, it’s very unusual. We have had non-stop westerly winds from the snow drying out the country.
“The countryside looks very ordinary, the big problem is the lack of water, a lot of dams are going dry in the first week of October which would normally happen at the end of January, so if we don’t get serious rain shortly, it’s going to be a very long summer.”
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