EYCI looks set to gain

‘EYCI looks set to gain, let it rain, let it rain, let it rain’


Commercial
Aa

What would a wet summer do for the Eastern Young Cattle Indicator?

Aa

CATTLE slaughter has been running well ahead over the last eight months, but there is a good chance this will come to an end over the coming quarter.

With plenty of rain across the east coast supply should tighten, which is likely to bring a solid start to prices in the New Year.

Cattle slaughter is on track to be the strongest in three years and only behind the drought-affected slaughter rates of 2013-2015.

The herd hasn’t recovered from the liquidation of the 2013-14 drought and we know from female slaughter rates that any herd increase we did see in 2016-17 has been reversed this year.

The rain forecast is widespread and heavy. At the end of 2014 and early in 2015 we saw similar rainfall and then more.

FIGURE 1: Eastern Young Cattle Indicator. From the start of December 2015 to the end of January the Eastern Young Cattle Indicator (EYCI) gained 34pc to reach new records at that time.

FIGURE 1: Eastern Young Cattle Indicator. From the start of December 2015 to the end of January the Eastern Young Cattle Indicator (EYCI) gained 34pc to reach new records at that time.

Cattle supply and slaughter did tighten in 2015, but it took until 2016 for the herd rebuild to get back into full swing.

A wet summer won’t see the supply of grain-finished cattle tighten, but it will keep a lot of cows at home.

When the seasons are good, there is still good money in producing cattle and so we’d expect a rebuild to see slaughter decline to levels similar to early this year, if not back at the lows of 2017.

With tighter supply of cattle in general, finished prices should strengthen somewhat, but it is restockers who will drive the market higher over the summer.

What does it mean?

The EYCI is rarely steady over the Christmas break.

Last year’s 3pc decline was a bit of an anomaly, with the market usually moving further. A price change in the order of 10pc is not unusual, with good rainfall seeing a jump higher and no rainfall a strong decline (Figure 1).  

The story EYCI looks set to gain first appeared on Farm Online.

Aa

From the front page

Sponsored by