While the past three weeks has seen the eastern states cattle market deliver one of its largest price rises in recent memory, underpinned by very welcome falls across several states, changes to other key market drivers have largely gone unnoticed in recent weeks. The EYCI finished Thursday at 348.5¢/kg cwt, while heavy steers reached 365¢/kg cwt, and the heavier end of the lamb market was above 580¢/kg cwt.
While it must be acknowledged that the 17% rise in the EYCI over the past few weeks was from an uncomfortably low level, it also clearly illustrates how dependent upon rain the Australian cattle market is. This week’s falls add to parts of NSW which have reported their best autumn break in several years, enabling ample pasture growth and winter crop sowing.
However, while the recent rain has received the bulk of the headline, along with this week’s news of a Japan-Australia Free Trade Agreement, the A$ has steadily risen to a 2014 high, touching 94US¢ in recent days. After trading earlier in the year around 90US¢, the recent rise will have added some measure of discomfort to the exporting sector, especially with the prospect of higher cattle prices, and thus beef prices in the pipeline.
Additionally, the Bureau of Meteorology stated this week that there is a greater than 70% chance of el Nino conditions forming in the second half of 2014 – normally correlated with below normal rainfall across large parts of southern and inland eastern Australia during the second half of the year. Thus, while the recent very good autumn break across most of southern Australia has been very welcome, the outlook suggests below average falls for the rest of the year.