East meets west

16 July 2015


While eastern states prices have followed an upward trajectory since the cattle market kicked last late last year, the young cattle market in WA has lost some of its momentum in recent weeks. As a result, the east-west price gap is now nearing the point of convergence.

Due to the smaller pool of cattle in WA, coupled with strong export competition between processors and live exporters, prices in the west consistently averaged higher than their eastern counterparts throughout 2014 and into the first half of 2015.

EYCI-vs-WYCI.bmp

However the fact that WA over-the-hooks (OTH) and saleyard indicators have largely moved in-step with one another has ensured that direct-to-works supplies are ample, reducing the need for processors to seek supplementary numbers via saleyards.

Scheduled maintenance breaks at a number of WA processing facilities in recent weeks, as well as limited restocking activity due to persistently dry conditions, has lessened demand further. Consequently, MLA’s Western Young Cattle Indicator (WYCI) was 14¢ lower week-on-week, at 556¢/kg cwt.

On the other hand, eastern states OTH indicators are still playing catch-up to their saleyard counterparts, making the auction market a comparatively more attractive selling method than is the case in the west. The end result has been more processor activity in eastern states saleyards, additional competition and stronger prices. Furthermore, tighter supplies this week, following some good falls of rain around NSW’s Central West and Hunter regions, pushed buyers to bid higher for the limited offerings.

The Eastern Young Cattle Indicator edged 6¢/kg cwt higher week-on-week, closing Thursday’s markets at 541¢ – now just 15¢/kg cwt behind the WYCI.

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