Just when cattle looked like they were getting into the ‘buy’ realms, prices bounced last week. Not all prices bounced however, with the Eastern Young Cattle Indicator (EYCI) rise not all being translated into slaughter categories. Today we are looking for value in the breeder market.
When markets are moving in a hurry, either up or down, we can get a idea of what’s driving it my looking at movements in a relative sense. While overall cattle markets are driven by international beef prices, and local cattle supply, different sectors are impacted by things like grass supply at different levels.
The prime example is the young cattle market, which is best tracked using the EYCI. The EYCI has been exceptionally high both in absolute terms, but also relative to the finished product, heavy steer, and cows. Figure 1 shows the EYCI along with NSW Heavy Steer and Cow Indicators. Volume at this time of year is low for the steer and cow indicators but prices have still tracked downwards with the EYCI, but not as quickly.
If we look at the NSW Cow Indicator, it has lost 11% since the start of June. It’s quite a fall, but now where near the 18.5% the EYCI has lost. Usually such a difference in price falls would suggest cows are now overpriced.
Looking at figure 2 we can see that cows remain relatively good buying, compared to where they were. Historically the NSW Cow Indicator averages a 22% discount to the EYCI at this time of year. In the current market the NSW Cow discount has shrunk, from 44% back into 37%. Cows are still underpriced, but not by as far.
Breeding cattle are likey of more interest to those who have been waiting for a price decline, and we have seen levels ease there too. Auctionsplus sales for Angus PTIC Heifers averaged $2490/head last week, down from $3158/head in the last week of May. That is a massive 21% fall. There were many more offered back in June however.
PTIC Cows have actually gained ground during the price decline. Last week PTIC Angus Cows on Auctionsplus averaged $3151, up from $3025 back in June. There was a massive $695 move upward last week however which throws the comparison out a bit.
For Station Mated Cows and Calves Auctionsplus averaged $3,355/unit last week, down from $3,450/hd back at the end of May.
What does it mean?
In both slaughter markets and breeder markets it seems young stock have borne the brunt of the price decline. Cows, both of the slaughter and breeder varieties have held their ground much better, which is of some consolation to those who have been building breeder numbers.
Young breeding stock, as in PTIC heifers, now look to be very buyable compared to where they were at the start of winter, and relative to older breeding stock, or weaner steers.
Key Points
- Slaughter cow prices haven’t fallen as far as young cattle, but remain relatively cheap historically.
- Young breeding stock have fallen much harder than older cows, but prices are highly variable.
- There to be much better value in heifers now than at the start of winter.
Data sources: MLA, Mecardo
