Young cattle market waits on break

Western young cattle continue to edge out their eastern counterparts, averaging a 47¢ premium since the start of 2019.

Despite lower-than-average rainfall in the west, young cattle in WA have been trading at a premium compared to the eastern states for the majority of 2019. Since January 2018, the Eastern Young Cattle Indicator (EYCI) has outperformed the Western Young Cattle Indicator (WYCI) on very few occasions as a result of the extended dry conditions. The spread between the WYCI and the EYCI currently sits at 22¢ in favour of the west.

Since January the WYCI has remained on average 42¢ below the 5-year average. While the west has not been immune to the dry conditions, young cattle prices have remained less turbulent than those seen in the eastern states and some recent rainfall across southwest WA will provide further support.

The WYCI declined to 508.75¢/kg carcase weight (cwt) on Monday, easing 17¢ from this time last year.  Throughput of WYCI eligible cattle for the year-to-June has increased 10% from the same period in 2018. The EYCI has stabilised in recent weeks, reported at 484.50¢/kg cwt at the start of the week, sitting 12¢ below year-ago levels. The throughput of EYCI eligible cattle for the calendar year-to-June has reduced 13% year-on-year and while young cattle continue to brought forward in good numbers, prices remain under pressure due to limited restocker interest.

So far in 2019, feeders buyers have acquired 46% of EYCI eligible cattle, paying an 34¢ premium to restockers, averaging 475¢/kg cwt. Feeder buyers have also driven purchases in the west, averaging 59% of WYCI eligible cattle for the year-to-date.

With returns for finished cattle holding up, feeder buyers in the east and west will continue to seek suitable entry weight feeder cattle. Until seasonal conditions allow restockers to re-enter the market with confidence, feeder buyers east and west will underpin the young cattle market.

Note: WYCI calculations include vealer and yearling heifers and steers, grade score C2 or C3, 180kg+ live weight.

© Meat & Livestock Australia Limited, 2019