Australian cattle prices: EYCI sets new record at 1102c/kg

Young cattle prices have smashed through the 1100c/kg barrier, something experts recently said wouldn't be done.

Young cattle prices have continued to break records. Picture: Zoe Phillips

The benchmark young cattle price has smashed through the unbelievable 1100c/kg barrier.

The Eastern Young Cattle Indicator hit 1102c/kg carcass weight on Wednesday – a rise of 40c/kg on a week ago and 274c/kg higher than the same time last year.

The record is 22c/kg higher than the most recent record of 1080c/kg which was set only on Monday.

Producer confidence, lack of numbers and a touch of “grass fever” appear to be the catalysts for the incredible prices.  

The competition between restockers and lot feeders has been driving up the prices, with restockers paying an average of 1214c/kg and feeders 1038c/kg.

While experts recently said it was unlikely the EYCI would break 1100c/kg, they now agree it has to stop soon.

Thomas Elder Markets analyst Matt Dalgleish said the EYCI was now at levels that aren’t sustainable.

“I think the move higher in the last week is more to do with short-term lower supply, due to rain and flooding in Queensland and NSW making getting stock to markets difficult,” he said.

“While the heavy steer prices is back up around 460c/kg liveweight, it does allow upside for young cattle.

“I think this is also a bit of a grass-fever scenario and an incredible amount of optimism from producers.”

Meat and Livestock Australia’s market information manager Stephen Bignell said during the past three months, restockers paid on average a 113c/kg premium over feedlots for young cattle.

And while no-one can predict where the price rises will stop, MLA, in its latest industry projections released on Monday, is forecasting restocker demand to drop away as the availability of feed declines moving into summer.

Mr Bignell said the EYCI is expected to fall to 1020c/kg by the end of this year, an indication that prices will drop in the short term but remain historically high for the foreseeable future.

Experts recently said  it was unlikely that the EYCI would break 1100c/kg.

Thomas Elder Markets analyst Matt Dalgleish recently said he couldn’t see finished cattle prices pushing higher, and “to get the EYCI above $11/kg, you’d have to have finished cattle above $5/kg,”.

He said the support for the global beef price had allowed for a “bit more room” domestically.

“It’s getting to the stage where I can’t see how anyone is making money off young cattle, it’s not going to crash, but there isn’t anything to push prices too much higher and equally there is nothing to lower them,” Mr Dalgleish said.

Finished cattle prices were also booming.

Global Agritrends analyst Simon Quilty said he believed cattle prices were “close to the top of the market”.

“Will we get to 1100c/kg? That’ll depend on restockers and feedlotters who are driving the market,” Mr Quilty said.

“Supply is tight and dry conditions in southern NSW and parts of Victoria will bring cattle forward, so I expect it’ll come off dizzying heights in the next few weeks,” he said.

However, he said a second, albeit more tempered, peak was expected in April-May next year.

“There’s still a bit of life left in young cattle, but for heavy cattle there will be a correction next year, but it’ll be a soft landing, we will never go back to levels in years gone past,” he said.

Meat and Livestock Australia managing director Jason Strong recently said the fundamentals of the beef industry were “as about as exciting as it gets”.

“Is it sustainable? The short answer is yes but that’s obviously not at the record prices,” Mr Strong said.

“We’ve got some drivers around supply and demand, which are certainly peaking prices, but we are also seeing a benefit of the investment and effort the industry has put in.”

Originally published as Australian cattle prices: EYCI sets new record at 1102c/kg