Key points:
- Last week, processor cow supply was 55% below the five-year average.
- Processor cow prices in NSW reached new records of $2,601/head this week.
- Current selling conditions are supporting a favourable short-term market outlook.
This week, processor demand for cows in NSW has driven prices to record levels, surpassing the previous record set in March this year.
Tightening supply is behind these high prices, as well as the general recovery of the market since it hit a low in late July.
Supply and prices compared
In the week ending Friday 16 September, yardings of cows over 520kg bought by processors were 55% below the five-year average and 54% below the rolling average for the last 12 months.
As sales continue this week, the average processor cow price in NSW is $2,601/head – 12% or $276/head higher than the 12-month rolling average of $2,325/head. There was a 54% decline in supply across this same period.
This data shows the role lower supply plays in driving market performance and prices through buyer demand.
Figure 1: NSW processor cow price and supply in the last five years.
This week’s NSW processor cow prices are 54% or $912/head than the five-year average. The last time the NSW processor cow price was this high above the five-year average was in July 2014, eight years ago.
Supply and buyer demand
Softening slaughter volumes in recent weeks and higher prices indicate processor buyers have had to compete harder to purchase and secure cows to process from a limited supply pool.
The low supply of processor cows in recent weeks reflects the overall trend of smaller yardings seen throughout the country.
Two key drivers have contributed heavily to tighter yardings. Firstly, rainfall across most supply regions has impacted the ability of stock to be transported off farm to market. Secondly, producers intend to hold on to livestock to capitalise on the favourable spring grazing conditions and add weight on to retained stock.
Looking ahead
As spring continues and pastures become even more abundant, constrained supply may continue as cattle weight gain performance improves – ensuring the short-term selling outlook remains favourable to turn-off cull cows for strong returns.
This will allow producers to invest in new genetics that will drive high performance for their breeding herds as the rebuild continues to evolve.
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