EYCI under supply pressure during October, likely to ease in November

27 October 2016

After spending two months in excess of 700¢/kg cwt, the Eastern Young Cattle Indicator (EYCI) has declined significantly in recent weeks, on the back of the seasonal rise in supplies.

During the two months in excess of 700¢ (9 August to 13 October), the number of cattle contributing to the eastern states benchmark indicator averaged 13,500 head – significantly lower than the 20,700 head average since the indicator dropped below 700¢/kg cwt.

Since the beginning of October, the EYCI has declined 52¢, but once this is converted to a percentage basis (7%), it is actually very similar to the seasonal October decline of previous years. During 2015, the EYCI dropped 48¢ (8%) to 547¢/kg cwt, and the year before (2014), the EYCI declined 25¢ (7%) to 340¢/kg cwt.

As clearly illustrated by the EYCI at the same time over the past two years, the recent decline is very typical for this time of year. Also, comparing to the past couple of years demonstrates just how high Australian cattle prices still are – with the EYCI almost double where it was just two years ago.

Looking forward, recent years have shown that the number of young cattle passing through saleyards during November declines. In fact, the average EYCI throughput during November 2015 declined 10% from October throughput, to 18,000 head, while in 2014 throughput eased 12% month-on-month, to 17,300 head. The result on the market was a steady to small rise by the end of November.

Throughput, or number of cattle on the market, is just one of many factors influencing prices and a range of other things need to be taken into consideration, such as the A$, rainfall, and export demand. However, considering the significantly lower national cattle herd than previous years, the usual decline in saleyard throughput is expected to be repeated this year, especially with the abundant pasture and water availability. This will go a long way towards assisting the young cattle market during November.      

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