Good prices for finished cattle contributed to a 6.5 per cent increase in the National Australia Bank (NAB) September Rural Commodities price index, released last week.
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According to the price index, prices for finished cattle held up well but lamb prices fell slightly.
Rabobank Agribusiness October Outlook warned that with the seasonal outlook not looking great, prices for younger cattle were not expected to see any upside over the coming month.
The Eastern Young Cattle Indicator (EYCI) rose 6.1 per cent in September despite tough conditions.
NAB agribusiness economist Phin Ziebell said the EYCI was predicted to remain in the mid 400-500 c/kg range over the coming months.
“Although there has been a big drop in demand for restocker cattle, these stronger cattle prices are reflective of the demand for finished cattle.
“However, if demand subsides and high US production continues, then we may see a further EYCI downside beyond drought influenced domestic stocking levels,” Mr Ziebell said.
Rabobank said young saleyard cattle were the most exposed to the seasonal variability and prices for those cattle eased last month with the EYCI dipping to $4.87/kg cwt on September 27.
Rabobank said the Eastern States Trade Lamb Indicator fell to $7.07/kg on September 29 – $1.70/kg lower than a month prior.
However sheep (mutton) prices in the yards rose through September, but dropped to $4.03/kg on September 27.
This was its lowest point since January and possibly an indication of increased supply of adult sheep, Rabobank said.
It said while lamb prices would ease further as spring progressed, the shorter supply of lambs and the drier conditions preventing early finishing of lambs, suggested prices would remain strong
NAB’s Mr Ziebell said wool “has seen some weakness too, although EMI (Eastern Market Indicator) is now back above 2000c/kg (last week).”
The EMI finished September more subdued than it started the month when it burst through 2100c/kg.
The market eased four per cent month on month, and saw a higher pass in rates towards the end of the month, particularly in the Fremantle offering, Rabobank said.
On the outlook for dairy farmers, Mr Ziebell said global dairy commodity prices were disappointing, with another decline in early October in US dollar terms.
“While the lower Australian dollar has supported the domestic indicator, it’s difficult to see further increases in the current climate,” he said.
