Cattle prices: are they the highest they have ever been?
week ending 26 March 2015
The recent peak in the Eastern Young Cattle Indicator, at 451.25¢/kg cwt on 3 February 2015, poses the question: are farm gate prices the highest they have ever been? The short answer is “yes” in nominal terms, but “no” in real terms.
Producers, with a long enough memory, often comment that the prices they received in the 1970s were much better than what they receive at present – and that is in fact the case, when taking into account the effects of inflation. Even though yearling prices have begun 2015 on a strong note, averaging between 400¢ and 450¢/kg cwt, they are not high enough in real terms to match the peaks during the 1970s.
That said, the low points of 2013, due to widespread drought conditions causing a huge influx of cattle onto the market, did not dip as low as the troughs of the 1970s, following the global beef crash. Additionally, through increased investment in trade and consumer marketing globally, volatility in cattle prices has decreased markedly in recent years, greatly reducing the price risk of being a participant in the industry.
A recent report gives a brief history of cattle prices from 1970 to the present and outlines the key factors that influenced the industry over that time.
For the full report, please click here.