Seasonality says cattle should get a bit cheaper in May

Cattle in a sale yard

With cattle markets at extraordinary levels, there are still plenty of questions as to how long they can last. Even with a herd at an extreme low, and prices at extreme highs, the pattern of supply should still show some sort of seasonality. Here we explore how this might impact prices over the coming months.

Seasonality in prices is mainly driven by supply fluctuations.  While there are times of higher and lower demand, supply has much more variation throughout the year.  Predictably, price responds to stronger supply by moving lower, and vice versa.

Our two basic measures of cattle supply are slaughter and yardings. Interestingly, cattle slaughter and yardings peak at different times.  Figure 1 shows cattle slaughter would normally hit its first quarter high in early February, before hitting the annual peak in May. 

Figure 2 shows cattle yardings normally peak for the year in February, before having a more minor peak in May. The May highs for both slaughter and yardings are linked to strong sales of females out of northern cattle areas and coincides with strong supply of young cattle from autumn weaning.

Prices seem to respond more to the May peak in supply rather than the February ones.  Figure 3 shows the five and ten year average Eastern Young Cattle Indicator (EYCI) increase through January and February despite rising supply. Demand must be increasing in February, to push prices higher in the face of stronger supply.

The May supply increases do have an impact on price. Figure 3 shows that the five and ten-year average curves fall from April to May.  Even with the average curves on a smaller scale, the changes in price look rather insignificant compared to the moves of 2020 and 2021.

Over the last five years, the EYCI has fallen 3.6% on average from April to May, and has fallen in 8 out of 10 years, with the largest decline being 13% in 2013.  However, in 2015 the EYCI gained 12%, so prices can rise at that time of year.

What does it mean?

While there is a good chance cattle prices will ease as we move towards winter, there is a month or two before significant downside is likely, at least from the supply side.  Given the state of the herd, and with a reasonable season forecast, price falls are unlikely to take the EYCI down below 800¢.

For producers looking to avoid downside, selling before or during April should save getting caught in a downtrend.

Have any questions or comments?

We love to hear from you!

Print This Post

Key Points

  • Cattle supply trends should persist even with the low herd and extreme prices.
  • May traditionally sees the peak in cattle slaughter, and falling prices.
  • Downside is unlikely to be large, but selling in April should see it avoided.

Click on figure to expand

Click on figure to expand

Click on figure to expand

Data sources:  MLA, Mecardo

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!
Cattle

Plenty of beef for the US

While beef export volumes have eased from the record highs of July, they continue to run well ahead of the average. The US market share

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.