Market Morsel: More life yet in Heavies
On the back of Meat and Livestock Australia’s (MLA) release of their April cattle industry projections the EP3 team decided to re-run the fair value model for the National Heavy Steer (NHS) to see what the reduced slaughter figures and quicker than expected rebuild means for local cattle prices.
MLA have outlined a much faster pace of herd rebuild over the next few years, supported by much lower than expected (from the February projections) annual slaughter rates. The herd size and slaughter are two of the eight inputs used as supply ratios in the EP3 NHS fair value model, so significant adjustment to what is expected for these factors will have an influence on the model output.
Late last year, based on higher projected slaughter and a lower herd, with a longer rebuild phase, the model was suggesting that 2021 would see a 6% decline in heavy steer pricing over the season bringing the NHS to an average annual level of 322c/kg lwt by the end of the year.
However, the pace of the rebuild and much tighter than expected annual slaughter levels have revised the 2021 forecast up 13% to an annual average of 365c/kg lwt for the national heavy steer. An annual average price of 326c/kg lwt is now anticipated for the 2022 season.