WITH cattle prices sitting at a four-year-low, industry analyst Matt Dalgleish has taken a deep dive into the numbers back to 1960s to see whether the market is still in a “normal” cycle.

Prices have been generating plenty of discussion this month as the benchmark Eastern Young Cattle Indicator has gone below 400c/kg carcase weight for the first time since 2019.

At considerable effort, Mr Dalgleish, co-founder of independent analysts EP3, has taken EYCI (and earlier) livestock price figures over the past 50 years and adjusted them for the Consumer Price Index, a quarterly measure of inflation, to take what is otherwise known as the “deflated” or “real” figure.

“To put it simply, $12 per head back in the ‘70s was worth a lot more than $12 now,” he said.

He has then taken those deflated figures back to the 1960s to see how the price of cattle stacks up, in real terms.

With the EYCI series only being established in 1996, Mr Dalgleish has pulled together early young cattle saleyards data from Victoria, NSW and Queensland and made a ‘makeshift’ indicator covering the past 63 years.

“I have access to average young cattle prices from Queensland, New South Wales and Victoria going back to the ‘60s, so I have just re-created what the EYCI would have been, based on those 200-400kg cattle that were being sold backed then,” he said.

“The numbers before ‘96 are a bit of an estimate, and it basically says ‘if the EYCI was being calculated back then, it would have been something around that value’. We haven’t had an EYCI the whole time, but young cattle have always been around.”

What is a normal cycle?

In order to calculate the $/head figure, Mr Dalgleish has taken the EYCI, which is presented in $/kg carcase weight, converted it to $/kg liveweight and turned it into a 300kg animal.

He says the long-term average for young cattle, in deflated terms, is $936/head – with the grey shaded area on the above graph representing the normal range between $620 and $1250 head. Historically, prices have spent 70pc of the time in this zone.

Based on this methodology cattle prices are heading to the bottom of that cycle, with a 400c EYCI making cattle worth about $650 in real terms.

While the cattle market is at the bottom of that cycle, it is currently not experiencing extreme pricing – unlike recent years where the deflated version of the EYCI went about $800 into the extreme zone and reached above $2000.

“There is no doubt it has come off fairly sharp, but it has been lower in ‘real terms’ and it is not as low as mutton which is outside the shaded area in real terms,” Mr Dalgleish said.