WYCI outstrips EYCI

21 April 2016

Two months from when the Eastern Young Cattle Indicator (EYCI) reached 605.75¢/kg cwt, young cattle prices in the eastern states have steadily declined, with the indicator now averaging 548.75¢/kg cwt, back 9% from the peak in February.

The Western Young Cattle Indicator (WYCI) however, currently sits at 629¢/kg cwt, and is at a 80.25¢/kg cwt premium to the EYCI.

What is driving this difference? A shift in buyer dynamics and stronger competition in the west.

In the eastern states, the proportion of cattle bought by the three major buyer types (feeders, processors and restockers) saw a considerable shift compared to the beginning of last year.

Softer processor demand resulted in only 30% of EYCI eligible cattle purchased by processors in the first four months of 2016, down from 38% the same time last year, partly due to the declining finish and condition of the cattle yarded.

On the other hand, feeders remained competitive and restockers became more active, purchasing 42% and 28% of EYCI eligible cattle, respectively.

A similar quality shift in WA resulted in only 26% of the young cattle yarded being WYCI eligible, down from 55% for the first four months of 2015. This, coupled with recent ‘above average’ rainfall in parts of WA, led to a large increase in the proportion purchased by restockers and, more recently, more purchased by live export. Purchases by feeders (although still the majority) and processors, however, declined.

Despite the change in buyer dynamics, feeders remained dominant for both WYCI and EYCI eligible cattle and the reduced processor demand has been offset by greater competition from restockers.

For regular updates on the WA cattle and sheep markets, subscribe to MLA’s new WA Weekly Indicator report, by emailing marketinfo@mla.com.au.

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