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2021 in review: a record year for Australian markets

16 December 2021

Key points:

  • The EYCI hit a new all-time record this week, reaching 1,167c/kg
  • Trade lamb and restocker lamb prices hit records this year
  • Freight and logistical issues will continue into 2022

The EYCI broke another record this week, which has been part of a larger trend for cattle and sheep markets this year. Catch up on the year in review, and what 2022 could hold for producers.

Cattle market shatters multiple records

2021 has been a great year to be a livestock producer. Generally, most livestock regions received a drenching, filling dams, providing long-term soil moisture and supporting pasture growth. High livestock prices also benefitted producers looking to sell stock.

As a result of the continued rain, the Eastern Young Cattle Indicator (EYCI) nearly broke a new record every week. Throughout the year, restocker demand moved from NSW to Queensland. At present, restockers in Dalby and Roma are driving the EYCI up, currently paying 1,278c/kg for young cattle, which is a 180c premium to the price feedlots are paying.

It was not only the EYCI that hit new records this year, as all cattle categories did. This flowed through to high over-the-hooks prices too. For a large part of 2021, the Western Young Cattle Indicator (WYCI) was operating higher than the EYCI, reaching a record of 1,187c/kg cwt in late October. Medium cow prices hit 381c/kg lwt earlier this year, on the back of acutely low supply of females as producers held back great numbers of heifers and cows for breeding purposes.

Feedlot industry goes from strength to strength

Despite record feeder steer prices, it has been a strong year for the feedlot sector. The industry achieved its fifteenth consecutive quarter of over 1 million head on feed. In a period of tight cattle supply, the lot feeding sector provided reliability and continuity. As a result, over 50% of beef consumed domestically, and 50% of total production, was grainfed.

Throughout 2021, 2.8 million cattle entered the feedlot sector. Of these cattle on feed, there was a trend towards feeding for longer as it made economic sense. There was also a move to long fed programs, with 15% more long fed Wagyus on feed this year compared to a year ago.

Record highs for lambs as the flock rebuilds

In the sheep market, the trade lamb and restocker lamb prices reached records in 2022, hitting 951c/kg and 1,034c/kg, respectively. While other categories didn’t hit the highs of 2019 and 2020, prices remain high in a historical context.

Lamb supply was up in 2021 on the back of elevated marking rates, with recent data showing non-Merino breeds achieved 114% marking rates this year. The restrictions on Victorian processors slightly affected lamb supply in spring, however, since November 2021 slaughter has performed above 2020 levels. Lamb slaughter should finish the year 3% above 2020 levels.

The spring flush in NSW and Victoria came later this year than the five-year average. As a result, there will be more lambs hitting the market in 2022 that have been finished on stubbles. Between November 2021 and March 2022, there are expected to be 2.9 million more sales than the corresponding period 12 months ago – a great thing for consumers looking to cook lamb over Christmas and in the summer.

This year, survey results from producers indicated that the flock rebuild is still ongoing, with 51% still looking to increase their flock in 2022. 30% of these are looking to do so by buying in more ewes, which will help keep demand high for mutton and ewe lambs, even with higher supply, underpinning stable prices.

The demographic of the flock has also changed in the last 12 months as producers look to retain more ewe lambs to build their flock, with more crossbreds used as breeding ewes. Only 72% of the breeding ewe population is Merino, a decrease from above 75% last year. There has also been growth in the Queensland sheep flock over the last 12 months.

A crystal ball for 2022

Going into 2022, there are a number of considerations. The strong rainfall events in November and December to date indicate that the 2021–22 La Nina will be a strong one. If the BOM prediction is right, there should be above average rain continuing in northern Australia until March

Globally, freight costs and shipping logistics are proving difficult. Shipping prices have risen sharply and getting access to boats and containers is proving hard. However, this is not a problem unique to Australia. Continuing to get product out of Australia could be difficult in 2022. The freight issues are also making it hard for producers to source key inputs such as feed supplements, fertiliser and fuel.

Labour will remain tight in 2022, however, it is hoped that government schemes will entice workers into regional Australia. Agriculture is competing with the mining, construction and freight industries for a limited pool of staff, making availability an issue and affecting labour costs.

Inflation is currently rather high, not helped by the global freight issues, creating higher input costs for producers. The depreciating A$ has made our meat exports more competitive on a global stage, but it has also made the cost of imports more expense, contributing to the inflation problem. While the Reserve Bank of Australia has indicated it won’t move rates in 2022, many analysts are tipping a rate rise in the new year.

As we go into 2022, the livestock industry is in strong shape. To see forecasts for 2022, look out for MLA’s sheep and cattle projections – due to be released in February next year.