Insights April 2021
Insights April 2021
- Australian young cattle prices reached a new peak in March but that may be short lived.
- The autumn break started well, and prices responded accordingly, however, the forecast is not so favourable over the coming months.
The gap between young cattle prices and heavy cattle prices widened in March, however, there are several factors that suggest the EYCI will settle back towards the price of heavy steers over the coming months.Young cattle prices in Australia surged to new highs in March, defying a more subdued trend in heavy cattle prices. Restocker demand was fuelled by widespread rainfall across New South Wales and Queensland. The EYCI reached a high of 896c/kg cwt in March, pushing past the high of 888c/kg cwt set in January. Prices have since settled around 880c/kg cwt in April. The WYCI remains at a record high of 968c/kg cwt. Current forecasts suggest Eastern states have a 35 per cent chance of exceeding median rainfall between April and June. This may curb restocker demand and cause prices to ease over the coming months. While the forecast is more positive in the West 55-60 per cent chance of exceeding median rainfall between April and June, if this eventuates young cattle prices will likely remain at or near record levels.
The gap in prices between the EYCI and heavy steers widened during March as the EYCI climbed higher. Heavy cattle prices remain flat suggesting a balanced relationship between supply and demand for finished cattle. Given slaughter rates are operating in a tight range, heavy cattle prices will likely continue to track sideways in April. The longer this divergence persists the stronger the likelihood that the EYCI will settle back towards heavy steer prices.
Easter holidays combined with flooding in both New South Wales and Queensland reduced weekly slaughter volumes by 23,304 head in the first week of April. The total slaughter volume for March was a more modest decrease, down by 0.8 per cent from February. Slaughter volumes are expected to remain tight in April and are well below year ago levels. If the forecast for a dry April to June eventuates there may be an increase in throughput however levels are expected to remain below the long-term average due to low herd numbers and restocker demand.
Source: Meat & Livestock Australia