1004033012TANIABAKER_125638758_MOO..VINGONTHRU

After three months of relatively steady prices, the cattle market has taken a dive again in recent weeks. It’s either a supply, or demand issue, or possibly both. Here we go looking for the cause, and if we’ve seen the end of the 1000¢+ Eastern Young Cattle Indicator.

The decline in cattle prices isn’t isolated to one category, all cattle prices are falling.  Figure 1 shows National Feeder, Trade and Heavy Steer prices have all lost significant ground in recent weeks.  While the Feeder Steer Indicator hasn’t quite breached the low seen back in July, Trade Steers well and truly have.

The Heavy Steer Indicator has been afflicted by low volumes, and as such volatility, but recently numbers have risen, and given way to a price decline.

With cattle prices, demand declines at the export end will flow through to finished cattle, both grass and grainfed, which then impacts feeders and as such young cattle prices. We’ll know how November export volumes performed in a few days, but until then we have to go off prices. 

Figure 2 shows the EYCI and the 90CL Frozen Cow to the US.  Frozen 90CL is a major beef export for Australia, and issues with demand at the cheaper end of the market will often show up in the 90CL price. 

Steiner are reporting lacklustre demand for Australian beef from the US at the moment, driven in part by lower domestic prices.  Figure 2 shows that 90CL prices have fallen in recent weeks, and importantly, that the EYCI is still at a strong premium.

Figure 3 shows how cattle slaughter and the EYCI premium or discount to the 90CL have had a strong relationship over the past 20 years.  The last two years of tight slaughter numbers has seen a hefty premium for the EYCI.  However, increasing supply will no doubt see the EYCI return to a smaller premium, as processors claw back some margin.

What does it mean?

With an increasing herd comes stronger young cattle supply.  Late spring is often a heavy turnoff period, and we might just be seeing a return to more normal pricing spreads between export values and cattle prices.

Things like demand issues out of China could be exacerbating the current fall, but it might just be the correction we had to have

Have any questions or comments?

We love to hear from you!

Print This Post

Key Points

  • Cattle prices have fallen heavily in recent weeks, with all categories losing ground.
  • Export beef prices have eased with weakening US demand, but the EYCI remains at a premium.
  • Cattle prices remained at a very high price, and with increased supply were destined to fall.

Click on figure to expand

Click on figure to expand

Data sources: MLA, Steiner

Photo Credit: Tania Baker “Moovin’ On through”

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!
Northern bos indicus cattle in yard
Cattle

Someone let the bulls out

It could’ve been a post Beef Week high, or an adjustment in demand but this week’s market exuded a higher level of confidence. Sellers were

Read More »

Want market insights delivered straight to your inbox?

Sign up to the mailing list to get regular updates to new analysis and market outlooks

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
Listen to the podcast

Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.

Photo of a farmer surrounded by Merino sheep in dusty yards
Research: Analysis of the Australian sheep flock

In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making. 

Image of harvested grain pouring into a chaser bin
SERVICES AND CAPABILITIES STATEMENT BROCHURE

We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.