FOR almost a month the Eastern Young Cattle Indicator has risen every sale day and hit 566 cents a kilogram (carcase weight) last week.
The rise has been unprecedented and shows little sign of easing, although there was a flatter trend towards the end of the week. Most selling centres recorded rises which resulted in individual sales averaging well above the EYCI, including Wagga Wagga, where EYCI specification cattle averaged 616.8c/kg, while at Forbes the av was 598.46c/kg.
Yearling steers across all NSW sales lingered about 600c/kg, reflecting the strength of the market and indicated there was more room for the market to move higher.
Despite cattle prices at both saleyards and direct consignment now firmly at home in uncharted territory, the incentive for processors to maintain throughput is ensuring there are still good margins to be captured by trading.
The unusual fundamentals are making incredible forecasts of an (EYCI) as high as 700 cents a kilogram (carcase weight) look entirely feasible.
An early break in Queensland in October could see an EYCI of 700c/kg arrive before Christmas, according to Mecardo market analysts.
While cattle traders would have to be feeling nervous given the levels they are now forced to buy in at, particularly combined with talk of a return to El Nino conditions, Mecardo's Angus Brown recently released market analysis pointing to current margins on the sell/buy basis being as strong as they have ever been.
With finished and feeder steers making more than 300c/kg (liveweight), producers selling these categories can easily afford to pay the same cents a kilogram and still make a profit, Mr Brown said.
He outlined a scenario where a feeder steer margin of $284 a head under current levels would give a store steer price of 410c/kg (lwt), equating to an EYCI of 720c/kg (cwt).
That would be a 21 per cent climb on the current market.
"The market has to fall a long way before cattle traders would make a loss," Mr Brown said.
"Processor and feeder demand are currently driving the market."
He said restockers hadn't re-entered the market in big numbers since the last drought broke, but if they did, it would drive the price up.
Grid prices were already at all-time highs due to numbers of killable cattle contracted since May, leaving processors scrambling for supplies.
Mecardo analyst Augusto Semmelroth said heavy steers in NSW had lifted from 471c/kg to 518c/kg (lwt) in the past month and from 430c/kg (lwt) in May.
"Export prices continue to rally so processors have plenty of incentive to keep supply coming," he said.