Insights November 2021
Insights November 2021
- New records continued to be set for Australian cattle prices in October with gains in both the eastern states and Western Australia.
- Tight supply, firm global demand and competition between re-stockers and feedlot buyers is supporting high prices.
- Increased cattle yarding are expected in November which could mean prices are near their peak.
Australian cattle prices continued to set new record highs in October. The Eastern Young Cattle Indicator (EYCI) edged 3.3 per cent higher from the start of October to a peak at 1,076c/kg late in the month. The EYCI has now spent the last two months above 1,000c/kg, a level more than double the price it was at the start of 2020. After being relatively stable since July, the Western Young Cattle Indicator (WYCI) soared 17.6 per cent higher from the start of the month to a peak of 1,187c/kg. This dramatic lift was likely triggered by above average rainfall.
Prices have trended higher despite a steady upward trend in cattle yarding. Average weekly yarding in October increased 3.8 per cent month-on-month. This was the fourth consecutive month of growth which took yarding 29 per cent higher than June. The steady climb of both prices and yarding shows the strength of demand. Competition between re-stockers and feedlot buyers has fuelled demand. Favourable seasonal conditions and a positive outlook has supported strong re-stocker demand. Expectations of higher global beef prices in early 2022 has driven greater demand from feedlot buyers.
Increased yarding are yet to translate into increased slaughter which remained subdued. Average weekly slaughter in eastern states during October was 10 per cent lower year-on-year and 32 per cent below the 10-year average. While this continued to add support to high prices, it also kept export volumes tight. Beef exports in October fell 6.9 per cent from September and were 8.6 per cent lower year-on-year. South Korea remained the stand-out market with a 9.4 per cent increase in volume month-on-month. The stability of exports to South Korea has seen it overtake the US and China to be Australia’s second largest beef export market in 2021. Global demand is expected to remain strong, with supply remaining the major limiting factor for Australian exports.
Cattle prices could be nearing a peak as the onset of warmer weather typically leads to a 14 per cent lift in yarding from October to November. However, a lift in supply from southern states could be matched by stronger re-stocker demand if the positive outlook for the northern wet season eventuates and keep prices near current heights.
Source: Meat & Livestock Australia