CATTLE prices were stable in September, Australian milk production was down, lamb prices eased, but wool was on the up, according to the latest season outlook from Bendigo Bank Agribusiness.
The bank’s Agricultural Analyst, Joe Boyle, said Australian cattle prices were relatively stable throughout September. The National Young Cattle Indicator lost -2.0 per cent throughout September to now sit around 460 c/kg, while the National Heavy Steer Indicator gained +3.0 per cent. Prices continue to be supported by strong export demand.
Cattle slaughter averaged 149.6 thousand head per week in September, up 14.4 per cent compared to September last year and relatively in line with August. While export demand, primarily from the US, continues to provide underlying support for beef prices.
“Comparatively favourable seasonal conditions across the northern growing regions continue to provide some support, although drier conditions more recently and across the south are limiting restocker activity,” he said.
Should the favourable conditions forecast in the BOM’s three-month outlook eventuate, an increase in restocker activity would continue to support prices. If dry conditions persist throughout October, markets may soften, he said.
Senior Insights Manager, James Maxwell, said Australian milk production in the first two months of the new season was already 3.4 per cent below last season. “This isn’t a surprise given the seasonal conditions in southern dairy regions and a reduced herd. While the outlook suggests a wet spring, feed shortages will likely persist through the peak production period,” he said.
“Even with grain harvest coming up and improved pasture growth, should climatic conditions improve, production will face an uphill battle to exceed last season, given reduced herd numbers.”
Mr Maxwell said the initial production estimate for the 2025/26 season was a range of 8.2-8.1 billion litres. “With a slow start to the season, it’s looking likely to be at the lower end of that range, “ he said.
“US milk production continues to improve after a period of stagnation. The US dairy herd is expanding, and at 9.08 million head, it is the largest herd in close to 30 years. Milk output is lifting as a result, which is having an impact on both US and global dairy pricing. US Class III milk futures fell below US$17 for the first time in over a year, and forward contracts point towards lower prices as production improves.”
Mr Maxwell said Lactalis was confirmed as the winning bidder for Fonterra’s Australian assets in a $3.46 billion deal. “While the deal is not completely finalised – shareholders will vote on the proposal this month – the sale is expected to be cleared without issue,” he said.
“The response from the Australian dairy industry has been mixed, with many expressing concerns about Lactalis’ intentions, particularly with regard to manufacturing facilities. Fonterra claims it will be ‘business as usual for their suppliers, but Lactalis has remained tight-lipped as to their future plans for Fonterra’s assets in the Australian market.”
The Senior Agricultural Analyst, Sean Hickey, said prices across the horticultural sector remained generally lower despite some mixed results compared to 12 months ago. “Vegetable sector prices were seen as being slightly lower compared to the same time last season, with only brown onions priced notably higher,” he said.
Onion producers faced challenges across the key producing state of South Australia this season, off the back of the near-record dryness at the start of the year, which affected both yields and quality. “Ongoing cost pressures driven by inputs continue to impact margins and are now being passed on to retailers in recent months,” he said.
Meanwhile, berries are now readily available with decent quality. We expect strong consumer demand across the berry sector as a result, with pricing sitting around its lowest level for this time of year since 2022.”
Mr Boyle said Australian lamb prices had eased slightly from the record levels of the past few months. The National Trade Lamb Indicator (NTLI) has fallen by -7.1 per cent from its recent peak at the start of August, now sitting around 1,140 c/kg. “At this level, the NTLI is up +36.1 per cent from the start of the year and +46.9 per cent higher than the five-year average,” he said.
“The ongoing concerns regarding tighter supply and the delayed arrival of large quantities of new season lambs are continuing to keep prices elevated.”
Mr Boyle said lamb processing rates had picked up slightly throughout September. “Average weekly slaughter averaged 366.1 thousand head, but this remains -6.0 per cent below September last year and -18.9 per cent below September 2023. Supply of new-season lambs is expected to rise as we move further into spring. However, quantities overall are forecast to be lower due to elevated destocking and unfavourable conditions over the past 18 months in key production areas,” he said.
The supply of new season lambs should lower prices. “The other key factor to watch will be how the season develops, as should conditions be favourable across the southeast, we may see restocking begin, which will keep prices elevated as well.”
Agricultural Analyst, Claire Adams, said the Australian wool market continued its auspicious start to the season, increasing for 11 consecutive selling weeks, lifting the AWEX EMI to 1,565 c/kg. “This is 348 cents higher than the start of the season and 461 cents higher than the same time last season. The increases have been shared across the microns; however, merino fleeces have been particularly well supported with increases of up to 221 c/kg seen week-on-week for some merino fleece types,” she said.
“The EMI in US cents terms has also risen 248 USc over the same period to sit at 1032 USc/kg. This increase has been despite the Australian dollar strengthening at varying times over this period, speaking to an underlying level of support within the market.”
Ms Adams said as forecast, supply had decreased this season. “As prices have improved, the current weekly offerings are sitting at similar levels to last season as producers take advantage and bring stored wool to market. This parity is providing a sense of optimism for sellers that the recent price increases are an example of a true increase in demand as opposed to purely being driven by lower supply,” she said.
Ms Adams said there were reports from the recent Nanjing Wool Market conference in China indicating low levels of stock at mills, which are helping to build demand. “However, it was also noted that as prices increase, blends will find favour in keeping price points in check. Following the strong start to the season, overall market sentiment has lifted to a belief that the lift in demand is genuine and sustainable,” she said.
