THE cattle market has hit another milestone on its record-breaking run with the Eastern Young Cattle Indicator (EYCI) hitting 709c/kg carcase dressed weight, up 10c on yesterday.
The meteoric rise has seen just seven months pass since the EYCI hit 600c/kg on January 13, and just over 14 months since it surpassed 500c/kg on June 17, 2015.
According to Meat and Livestock Australia the EYCI is the general benchmark of Australian cattle prices and is a seven-day rolling average. EYCI eligible cattle are C2 and C3 vealer and yearling steers and heifers sold in Queensland, NSW and Victoria.
Meat and Livestock Australia market information manager Ben Thomas said widespread rain across the eastern states, combined with the national cattle herd sitting at a 20-year low, had pushed the EYCI into previously unchartered territory.
“As outlined in the recently released MLA July cattle industry projections, restockers have been the driving force behind the EYCI bolting through the 600s during June and July,” Mr Thomas said.
“Restockers accounted for 41 per cent of EYCI-eligible purchases in July, up from 34 per cent in the same month last year.
“At the same time, lot feeders have held their own, consistently accounting for 44pc of EYCI cattle bought for the past four months.
“Processors usually account for 29pc of the July EYCI purchases (five-year average), but during July 2016, they collectively only bought 15pc.
“This is the lowest proportion of processor EYCI acquisitions in over six years and truly highlights where the cattle market strength is being generated.”
Mr Thomas said EYCI cattle had averaged more than 700c at numerous selling centres during the past week including at Wagga Wagga, CTLX Carcoar, Gunnedah, Scone, Singleton, Dubbo and Roma store sale.
Mr Thomas said the biggest factor influencing where the EYCI would eventually peak is the “depth of restocker pockets.”
“Three things typically happen to the EYCI from August to November – prices ease, restockers take a step back and processors purchase fewer EYCI cattle at the end of spring compared to the end of winter,” Mr Thomas said.
“Whether or not these trends occur in 2016 remains to be seen, but if the average price decline were to be repeated, the EYCI would remain in the mid-600c/kg cwt territory.
“The trend least likely to occur, for the first time, is processors taking any further steps back in the number of EYCI cattle purchased – especially considering the very low proportion of acquisitions they are currently making.”
