EYCI supported by processor competition

Despite no major change in conditions, the Eastern Young Cattle Indicator (EYCI) has continued to rise, with interest from restockers and northern processors the major drivers.

In spring 2017 and 2018, the EYCI rallied, largely off the back of increased restocker interest. Anticipating sharp price corrections in the event of widespread rain, restocker activity lifted, unfortunately, on both occasions conditions only deteriorated.

In the current market, the same expectation amongst restockers could explain recent moves higher for the EYCI. Central western Queensland and northern New South Wales did receive some welcome rain last week, however widespread follow-up rain will be required to see any significant impact on the store market.

Since the beginning of October the EYCI has seen consistent weekly gains and on Tuesday 5 November was reported at 516.5¢/kg carcase weight (cwt). When assessing the EYCI at a state level, Queensland has been a driving force behind the most recent upside in the store market, closely followed by NSW.

At a state level, for the week ending 1 November, the EYCI was reported at:

• Queensland - 502.75¢/kg cwt, up 23.25¢ on the week prior
• NSW – 516.75¢/kg cwt, up 5.75¢ on the week prior
• Victoria -513¢/kg cwt, down 13.25¢ on the week prior

In Queensland and NSW, there were price increases for EYCI eligible cattle across all categories of buyers (feeders, restockers and processors). However, the sharp increase in prices paid by processors indicate that the recent lift in the store market is being driven by robust demand for finished cattle, rather than solely a change in restocker intentions.

Despite over the hook indicators stabilising this week, the store market increase appears to reflect the surge in recent OTH quotes, particularly in Queensland (see last week’s commentary Queensland grids jump). In the short-term, cattle look to be well supplied, however demand for finished cattle looks to have accelerated, with export prices now in record territory.

For the week ending 1 November, Queensland EYCI buyer breakdown was reported at:

• Feeders – 525.5¢/kg cwt, up 11¢ on the week prior
• Restockers – 479.25¢/kg cwt, up 28.5¢ on the week prior
• Processors – 485.75¢/kg cwt, up 36¢ on the week prior

For the week ending 1 November, NSW EYCI buyer breakdown was reported at:

• Feeders – 530.75¢/kg cwt, back 2.75¢ on the week prior
• Restockers – 502.25¢/kg cwt, up 16.75¢ on the week prior
• Processors – 492.75¢/kg cwt, up 8.75¢ on the week prior

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