Paddock feeder prices go in opposite direction of saleyards

This sums up the market talk at the moment as prices continue to track sideways for the most part. The indicators that have lost between 5 and 10 cents a kilogram over the past week have been matched by others gaining around that amount.

Most agree the market has held up considerably well given ongoing high levels of supply, with the season turning pretty harsh in parts of the south encouraging any stock that is not considered core to the enterprise to be turned off.

That has combined with traditional big northern turn-off at this time of the year to the point where even fairly solid demand on the back of good rain in Queensland has not put upward pressure on prices.

Elders June cattle market report says the price falls over autumn and winter need to be read in context with a period of abnormally large supply.

For much of this year slaughter has tracked higher and since the start of May has accelerated to reach a point that is 17 per cent above the five-year average, Elders analysts reported.

"The processing sector is struggling to keep up, adding additional shifts or extending hours, but the backlog of cattle continues to grow with some processors reportedly booked up to mid-July," they said.

"The good news is that international markets are soaking up these supplies with barely a flinch."

Australian beef export levels for the five months to the end of May were up by nearly 30pc with exports to the US up 80pc and Japan up 30pc.

Elders' market view is that cattle prices should start to grind higher over the next quarter as local turnoff eases seasonally and United States feedlot beef production backs off.

StoneX analyst Ripley Atkinson said paddock values for feeder steers were currently moving in opposite directions to the saleyard market, with the Argus price falling 3 cents a kilogram liveweight while the national feeder steer indicator lifted.

"Plentiful supply of cattle has feeders sitting on their heels, holding grids firm or softening marginally for paddock cattle," he said.

"Watch this dynamic as winter continues. Grid prices may continue to come under pressure due to supply as feeders choose to fill space via the more volatile saleyard market."

Rabobank's latest Global Beef Quarterly says the Australian market remains balanced but increasing import demand from the US was starting to impact.

Analyst Angus Gidley-Baird said the contraction in US production, particularly the reduction in cull cow and bull slaughter, provided opportunities for Australian lean trimmings export volumes.

"It also provides opportunities for Australian volumes into key Asian markets where the US is a comparable supplier to Australia," he said.

But while US import prices had increased, this had not completely flowed through to Australian cattle prices yet, he said.

Much of that was to do with the supply situation.

Most agents are saying there won't be much shift in the strong numbers coming through over the next fortnight at least, with no rain forecast for much of the south keeping vendor's feet to the pedal.

They reiterated that higher quality offerings were still making very good money, saying that gap between the better article and secondary quality had grown even bigger.