The Detail

It has taken a few years but the Australian Heavy Steer has now moved back into discount price spread territory compared to it’s equivalent US counterpart, the Choice Fed Steer. In mid-2020 tight domestic supplies and the beginnings of a herd rebuild saw the Australian Heavy Steer price move ahead of the US Choice Fed Steer, holding a premium price through to mid-2022.

Foot and mouth disease concerns hit the Australian market during July 2022, which saw saleyard cattle prices tank, albeit briefly. Additionally, there were a few weeks of low saleyard volumes of cattle that met the Meat & Livestock Australia specifications for the Heavy Steer, which saw the price drop exacerbated somewhat.

After recovering some of the lost ground over late July/early August the Australian dollar began to fall against the US dollar, providing a competitive price edge for the Australian Heavy Steer versus the US Choice Fed Steer. The AUD/USD declined from 71USc in mid-August to move below 63USc this week, a fall of 11%, which has helped push the Australian Heavy Steer back into discount price spread territory.

Extreme movement of the price spread would be premiums above 7% or discounts below 63%. For much of 2021 the price spread between the Australian Heavy Steer and the US Choice Fed Steer sat at extremely strong historic levels with the annual spread in 2021 averaging a 15% premium.

The current price spread for the Australian Heavy Steer versus the US Choice Fed Steer sits at a 7% discount, as at the week ending 7th October. Normally for this time in the season the price spread sits at a 12% discount, at least according to the ten-year average seasonal trend, so presently we are pretty much back to normal pricing when compared to the US market.