Processors sidelined by record prices

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Author: Adrian Ladaniwskyj

Another week of extraordinarily tight supply has sent the Eastern Young Cattle Indicator (EYCI) surging to an all-time record high of 907¢/kg cwt, mostly driven by strong prices in QLD. Unsurprisingly, Restocker and Feedlot buyer activity has dominated the market for young cattle, effectively squeezing terminal processor buyers out of the auction market with spirited bidding.

Yardings remained at unusually lethargic levels, only rising 8% from the week prior. A total of 22,353 head were yarded on the east coast for the week ending 9th April 2021, which was 1,595 more than the prior week.

Slaughter remained remarkably subdued, only rising an additional 6% from the previous week. For the week ending 9th April 2021, 74,644 head were slaughtered, which is up 3,984 head on the week prior.

The EYCI responded strongly to the exceptionally tight supply conditions the market is experiencing presently, rising 31¢ to end the week at 907¢/kg cwt.

Looking deeper at the composition of the index for the last week, of the 14,698 eligible cattle that were covered, half were yearling steers, and 90% of all cattle were purchased by Feeder and Restocker buyer categories, with processors effectively squeezed out, only picking up 1,400 head of young cattle at the saleyards over the last week.

Strong prices at Roma store of 943¢/kg cwt, and 922¢/kg cwt at Dalby provided the majority of the upward momentum for the EYCI, while spirited bidding at Casino saw prices reach the scorching level of 1,029¢/kg cwt, with Scone not far behind at 985¢/kg cwt.

On the West coast, the Western Young Cattle Indicator (WYCI) went the other direction, falling 21¢ to bottom out at 954¢/kg cwt for the week. Only 879 eligible head changed hands, with 90% belonging to the lighter weight vealer category. 96% of the offering were sold to Restockers and Feeders, with Feeder buyers dominating the market. 

The national categories for this week reflected the strong Restocker market, but, red ink dominated on the heavier cattle specifications.

Restocker Steers lifted 12¢ (2%) to close at 573¢/kg lwt, while feeders dipped 1¢ (<1%) to 464¢/kg lwt. Medium steers copped a beating, dropping 18¢ (4%) to 388¢/kg lwt. Heavy steers and medium cows also lost ground, respectively falling 6¢ (2%) and 4¢ (2%) to settle at 374¢/kg lwt and 276¢/kg lwt. Processors steers and vealers were unchanged at 464¢/kg lwt and 523¢/kg lwt.

The Aussie dollar also had a good week, lifting 1.7% to finish the week at 0.775USD. Australia’s unemployment rate fell by another 0.2% to 5.6% – well and truly ahead of where the RBA was forecasting for this year. The latest business conditions survey by NAB resulted in the index hitting an all time high; foreshadowing continued strength in the Australian economy.

The week in cattle 16 - 04 - 2021
East coast cattle yardings
East coast cattle slaughter

The week ahead

With a respectable dose of 5-10mm and up to 25mm in some areas due right down the east coast and down into Victoria expected over the next week, producer confidence can be expected to remain high. The surge in the EYCI this week, coupled with strong buying activity from Restockers and Feedlots suggests that the supply demand balance continues to remain tight, with producers holding back stock from turnoff. We might just see more record prices set again next week, if the lure of the elevated market doesn’t prove too difficult to resist.