MLA’s OTH cattle indicators explained
04 January 2016
The purpose of MLA’s over-the-hook (OTH) cattle indicators is to provide those along the supply chain with trends to analyse market strength and make comparisons between cattle sold direct-to-works versus other methods.
MLA formulates the indicators by collecting processor grids on a weekly basis and weighting them on throughput on a state by state basis. The reason they are weighted is to represent the market as accurately as possible.
For example, the grid from a processor that slaughters 1,000 head per week would have a heavier weighting in the indicator than one that slaughters 100 head per week. Hypothetically, if the larger processors top grid price was 600¢ and the smaller was 500¢, then the indicator would be skewed towards the larger processor and be 591¢ for that week. Conversely, if a simple average was used, the indicator would be 550¢ – considering only 100 head were offered the lower price, the indicator would not be as representative.
One of the complexities is that all processors have slightly different grid specifications, so the indicative prices quoted each week are highly unlikely to be the exact price received by a producer. However for the purpose of analysing trends and market strength, the indicators are more than sufficient.
For Queensland alone, there are almost 100 individual OTH indicators generated on a weekly basis, including MSA and non MSA categories, steer, heifer and grainfed indicators for a range of different weights.
To receive the free weekly OTH report for your state, email email@example.com
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