Cattle and lamb markets feel the heat

08 October 2015

A blast of hot weather for most of eastern Australia last week contributed to the drop in the cattle market, with all indicators losing ground.

After coming tantalisingly close to hitting the 600¢/kg cwt mark, the Eastern Young Cattle Indicator (EYCI) lost 28.75¢ this week, to finish Thursday’s markets at 566¢/kg cwt. While the decline was rapid and significant, it should be kept in context with where the market has been, as the EYCI is still more than 200¢ above where it was at this time last year.

Similarly, the eastern states heavy steer indicator declined 18¢ to finish at 296¢/kg lwt, while medium cows declined 11¢, closing at 232¢/kg lwt.

Forcing the decline in the cattle market has been the combination of hot and dry conditions, along with uncertainly in the US market, which has been Australia’s largest export destination by a significant margin this year.

In a normal annual cattle price cycle, the final quarter of the year sees the market ease, and under the current circumstances, it is more than likely a normal price pattern will play out for the first time this year.  

For sheep and lambs, after improving last week, the same hot conditions and increased numbers on the market caused the eastern states indicators to head south, with trade lambs losing 29¢ week-on-week, to 495¢/kg cwt. The mutton indicator fell 35¢ to close Thursday at 295¢/kg cwt. Similar to cattle though, most lamb indicators remain above year-ago levels.

When considering whether the lamb market may drop further, and by how much, looking at past trends, November is when prices bottomed out last year. As Australian Bureau of Statistics (ABS) data shows lamb slaughter is up 4% year-on-year after eight months, availability is expected to tighten in the final quarter, which should work to give support to prices.

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