THIS year is shaping as the one that rewrites Eastern Young Cattle Indicator (EYCI) records, but 2015 is being driven by very different forces, reports Meat and Livestock Australia.
Australian cattle prices had an extraordinary year in 2011, with the EYCI averaging 396.52 cents a kilogram carcase weight, which was the highest calendar year average on record.
Interestingly, the only significant opposition to prices then was the high $A, while all other factors were very much in the producers' favour.
In fact, the number of cattle included in the EYCI for the year-to-date in 2011 was 18 per cent lower than this year, and the number of cattle killed across the eastern states for the year-to-date was also 18pc lower – each working in the producers' favour.
In addition, and ultimately underpinning the lower saleyard and slaughter offerings, rainfall across most of the country was ‘very much above average’ for the summer, as opposed to ‘below average’ this year.
During 2015, however, the supply forces have been against producers, with high offerings evident of what have been prolonged dry conditions.
The main factor supporting prices has been the strong international demand, assisted by a significantly weaker $A in comparison to 2011, which for the year-to-date has averaged 21pc lower.
Highlighting the differences
Pulling all this together, 2011 highlights how far cattle prices can go and be sustained when there are tight supplies, even if the $A is at high levels; while in contrast, 2015 indicates the influence a strong international market can have, despite historically high slaughter and limited restocking interest.
Looking forward, provided the international trade environment remains strong over the coming months, the potential for cattle prices is significant, especially if supplies contract back towards 2011 levels.
Despite slipping in recent weeks, the EYCI is still well and truly in the 400c territory, and for the year-to-date, has averaged 443c/kg cwt, up 51pc year-on-year and up 12pc on how 2011 started.
A further interesting point is that 2011 holds the record for the number of consecutive sale days when the EYCI stayed above 400c (38 days), with the current string now at 35 days, and easily on track to surpass that record (428.75c/kg cwt on 5 March).
At the close of Monday’s markets the EYCI eased 1c, finishing at 428.25c/kg cwt.