Lowest May rainfall in 20 years for NSW

drought-3

The number of adult cattle processed in Queensland and NSW last week was 12% higher year-on-year, in both states

Most of southern Australia is yet to feel any reprieve from the dry conditions, despite the southern wet season traditionally starting in April.

Nationally, rainfall in May was the third lowest for the month on record, and in the lowest 10% of the Bureau of Meteorology’s (BOM) historical observations for May for the majority of southern WA, northern and eastern NSW, and southern Queensland.

The dry autumn has seen rainfall deficiencies emerge in southern WA, and existing deficiencies across parts of Queensland and much of NSW worsen – with a number of areas of NSW recording their lowest May rainfall for at least 20 years.

There was, however, some positive news for parts of southwest Victoria and Tasmania, where they received above average rainfall in May – reducing the rainfall deficiencies in these areas.

It’s therefore no surprise that eastern states adult cattle slaughter for the year-to-date is tracking 8% higher than the same period last year. In fact, last week was the highest number processed in a week since May 2016, at just over 150,600 head.

The number of adult cattle processed in Queensland and NSW last week was 12% higher year-on-year, in both states. The female kill, however, was up 22% in Queensland, and 8% in NSW. Victoria recorded a 29% lift in cattle slaughter from year-ago levels, while SA was down 42%.

Under the weight of increased supply and unfavourable growing conditions, the Eastern Young Cattle Indicator (EYCI) followed a mostly downward trajectory during May. The Indicator opened May at 501.75¢/kg carcase weight (cwt), and finished the month at 466.5¢/kg cwt.

Since the beginning of 2016, the demand from restockers has been a key driver of the upwards trajectory of the EYCI with the average purchase price of EYCI eligible cattle paid by restocker buyers at MLA reported saleyards consistently higher than the average price paid by feeders and processors.

This was, until the end of April this year, when we saw the average purchase price of the three main buyer types converge. Since then, restocker prices for EYCI cattle have continued to decline during May and is currently tracking below that of feeders and processors.

To give some perspective, this time last year, the average restocker purchase price was at a 37¢ premium to feeders, and 53¢/kg cwt above that of processor buyers. Whereas last week, restocker purchases averaged 32¢ and 25¢/kg cwt lower than feeders and processors, respectively.

Unfortunately, the most recent BOM rainfall outlook does not paint a positive picture for the winter months ahead. Southeast mainland Australia is looking likely to receive below-average rainfall for the June to August period.

NSW and northern Victoria have a 20-35% probability of exceeding the median rainfall over winter, while the likelihood across SA and southern Queensland is 25-35%.

https://www.mla.com.au/prices-markets/market-news/eyci-drifts-lower-through-a-dry-autumn/

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