Strong April, soft May
04 May 2017
The Australian cattle market remained resilient during the course of April, despite numerous trading disruptions from the Easter and ANZAC public holidays.
Influencing matters more, Queensland – the largest beef producing, lotfeeding and processing state in the country – had an additional Labour Day Public Holiday at the beginning of May, making four consecutive short trading weeks.
Nevertheless, the Eastern Young Cattle Indicator (EYCI) demonstrated resilience and averaged 659¢/kg cwt for April, up 18% year-on-year.
However, May has not been off to the same promising start as the market in April, and with all states set to resume usual trading activities next week, the market is looking likely to follow a normal seasonal downturn.
In fact, after just the first three days of May, the EYCI lost all its April gains and closed Wednesday’s markets at 645.75¢/kg cwt. Aside from the two years when cattle prices surged to unprecedented levels (2015 and 2016), the EYCI has dropped anywhere from 3% to 8% from April to May since 2010. If that translates in the current market, it could see the EYCI average somewhere in the vicinity of 606-639¢/kg cwt for May. While this is a significant decline, the lower bound is still 7% above the May 2016 average and illustrates the realms the present cattle market is in.
The likelihood of whether or not history will be repeated depends largely on feed availability. While many producers are currently in a favourable position, the fruition of the poor BOM May to June rainfall outlook will likely materialise the downward trend by the end of the period. The extent at which does remain limited though, on the back of the still very small Australian cattle herd.
If you’d like to follow all of MLA’s cattle market indicators and chart the myriad data points, take a look at the revamped Market Reports & Prices section of the MLA website.
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