AUSTRALIA’S benchmark Eastern Young Cattle Indicator has fallen below 400c/kg carcase weight equivalent for the first time since 2019, as saleyard prices continue to decline.
Falling to 396.85c at one point today, the decline in the seven-day rolling average of saleyard prices has accelerated in the past month, falling 131.78c – including a 43.33c drop to start this week. It must be noted that the results of today’s Roma Sale was not included at the time of publication, and could edge the indicator back above 400c later today.
Editor’s note: the EYCI is no longer published as a single daily figure, but is now live, and can be updated by NLRS during the day as new sales data is made available.
The last time the indicator dropped below 400c was at the height of the 2019 drought when it spent six days ‘with a three in front of it’ in March. Prior to that, the previous occasion was in 2014.
With heatwave conditions sweeping across New South Wales, saleyard reports from Gunnedah, Tamworth and Wagga Wagga this week all referenced the deteriorating seasonal conditions forcing the hands of more producers to sell.
EYCI throughput has been stable over the past few weeks, inside a band of 11,000-17,000 since July, suggesting there is no clear relationship between throughput and recent price movements.
Meat & Livestock Australia analyst Tim Jackson said while it was hard to attribute the latest decline in the EYCI to the heatwave, general confidence in the market was low.
“That is going to impact the EYCI, which is primarily a restocker indicator, more than it is going to impact the market as a whole.”
Feedlots appear to be taking stock on more of an “as needs” basis than trying secure cattle for the future – with the prospect of the market continuing to fall. Based on the current EYCI a 400kg feeder steer would cost $172 less than last week.
Mr Jackson said there was higher demand for heavier feeder steers, with high grain prices and low cattle prices pushing the “cost of gain” equation that way.
“Most of those heavier feeder steers are going to fall outside of the EYCI,” he said.
Positive outlook for the global beef market
While many are saying that rain is the only factor likely to push the cattle market higher in the short-term, Mr Jackson said some of the drivers in the global beef market could pick up demand in the medium term.
“The demand side has been pretty tough in the past couple of months with a lot of meat being held up in cold storages,” he said.
“But they are slowly working through it in Japan and United States at the moment and a lot the American production that has been fulfilling demand in our export markets over the past couple of years just isn’t there anymore.
“Their exports this year are down 7pc and that is with a female slaughter rate over 51pc, so they are still destocking. When the American herd properly enters into a rebuild, we anticipate their production will pull right back and that would spur a lot of demand for Australian beef from the US, Japan and Korea.”
What is the EYCI?
The Eastern Young Cattle Indicator (EYCI) is a seven-day rolling average of young cattle prices (vealer and yearling heifers and steers 200-400kg liveweight, scores C2 and C3) from 23 saleyards across Queensland, NSW and Victoria. It is expressed in c/kg carcase weight.
At any point in time, a seven-day rolling average includes data from the past seven calendar days. In the case of the EYCI, the dataset takes the average ¢/kg cwt of an animal matching the specifications of the indicator per day for the past week, adds them up and divides the figure by seven. The indicator is updated daily to create a rolling average value for this specification of animal.