Rain yet to register with markets
Article date: 6 Jan 2010
MLA's NLRS saleyard reporting has had a well earned break over the last two weeks as the regular livestock sales paused for the annual holiday period. As a result we are yet to see the impact of the rain in New South Wales and Queensland on the cattle market.
The extremely dry spring in northern New South Wales and south east Queensland was largely responsible for the declining young cattle price from September to December last year. As flood waters ease and pasture growth begins, we can expect northern cattle producers to start restocking on earnest and this will cause young cattle prices throughout the eastern states to rise rapidly.
The extent of the rise is very difficult to predict. In the face of low export prices we should not expect the rain to solve all the problems however it should solve one major problem; allowing the Eastern Young Cattle Indicator (EYCI) to begin the year above 300¢ and potentially rise above 310¢ within the first week.
The strength of the opening markets and the rate of increase in the EYCI will all depend on the flood water and the enthusiasm of restockers.
With follow-up rain in late January, there is a good chance that the EYCI will push past 320¢ by February however the prevailing export market conditions will likely see the EYCI peak below 340¢ in March this year.
The cattle futures market remained quiet over the break and it will not be a surprise if we have seen the last trade in this contract. If the EYCI does start strongly there will be a few people looking to close out sold positions but it is hard to imagine any new positions being opened in the next two weeks.
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