Slaughter at record low. Cows charge the moon.

Home > Market analysis > Slaughter at record low. Cows charge the moon.
Author: Adrian Ladaniwskyj

Coming out of Easter this week, the Eastern Young Cattle Indicator (EYCI) held its ground, still supported by tight supply stemming from continued low yardings levels. Compared to the end of March, most national categories, particularly feeders and restockers, saw respectable gains and medium cows took a running leap at the moon, advancing over 6%.

Yardings continued to track at exceptionally low levels, roughly on par with 2020 levels; dipping by 20% from the week prior. The biggest week-on-week reductions were in VIC, where offerings dropped 62%, and NSW shed 20%. In contrast, QLD continued tracking along, with little change to the subdued pace displayed the week prior. A total of 20,758 head were yarded on the east coast for the week ending 2nd April 2021, which was 5,267 less than the prior week.

Slaughter also fell hard over the short Easter week, dropping 25%, to settle at a record low level that has not been seen in the last decade, even accounting for the holiday period. For the week ending 2nd April 2021, 70,660 head were slaughtered, which is down 23,304 head on the week prior.

The EYCI held its ground compared to the prior week, only backtracking 1¢ (<1%) to finish the week at 877¢/kg cwt. This is 20¢ (2%) shy of the new daily record of 896¢/kg cwt set at the end of March this year. On the West coast, the Western Young Cattle Indicator (WYCI) climbed another 18¢ (2%) to reach 976¢/kg cwt. This is only a few cents off the pace in mid-march, when the WYCI hit an all-time record of 979¢/kg cwt.

The national categories were not quoted over the Easter period, but compared to the end of March, solid gains were in all specifications, apart from medium and heavy steers, which backtracked marginally. The standout winner this week were medium cows, which advanced 17¢ (6%) to 280¢/kg lwt.

The National Feeder Steer Indicator also pushed forward 12¢ (3%) to end the week at 466¢/kg lwt, representing a strong return to pricing seen back in February. Restocker steers followed suit, adding 12¢ to close off at 561¢/kg lwt. Vealers continued to charge upward, booking a 15¢ (3%) increment, to reach 524¢/kg lwt. Medium and heavy steers respectively shed 2¢(<1%) and 3¢ (<1%) to come to rest at 405¢/kg lwt and 381¢/kg lwt.

The Aussie dollar lifted slightly on the week prior, gaining 0.6%  to finish the week at 0.775USD.

The 90CL US frozen cow price put on a solid 28¢ (4%) ticking up nicely to 687¢/kg. The US continues to experience tightness in beef supply, with imported beef prices reaping the benefit. Limited availability from Australia and South America continues to cause concern among corporate US buyers, which is resulting in more aggressive buying behaviour. Elevated prices and tight supply have lead to subdued activity from US retailers in promoting beef sales with feature (or promotional specials) activity below the levels seen in 2019. 

The week in cattle 9 April
East coast cattle slaughter
BOM weather chart

The week ahead

With not much rain due to fall across the country in comparison to the deluge seen recently, paddocks will have a chance to dry out, and with transport issues easing, and the distraction of the holidays over, we may see producers make the usual post easter strong return to the markets.

Similarly, we can expect slaughter to come out of its slumber in the coming weeks, injecting more demand into the market. That said, the relatively stagnant EYCI and strong indicator prices this week suggest that the recovery trajectory of yardings and slaughter might just be a lot shallower this year compared to history, so price-wise, the next couple of weeks may prove to be fairly uneventful.