By Augusto Semmelroth | Source: MLA's NLRS, ACU
Young cattle prices remain at depressed levels across the east coast. They do, however, vary considerably between regions and depending on who is buying them. Breaking down the EYCI data shows that southern markets are faring better than their northern counterparts, while lot feeders outperform other buyers in NSW and Queensland.
The Eastern Young Cattle Indicator (EYCI) is a benchmark for young cattle prices, namely store and finished steers and heifers, on the east coast. As such, regional prices can easily deviate from the benchmark as a result of variable seasonal conditions and the type of animals yarded in different areas.
With that in mind, breaking down the EYCI is a very interesting exercise as it helps to understand the changing dynamics of cattle markets across the east coast. Figure 1 shows the EYCI data and percentile levels for individual saleyards in Victoria, NSW and Queensland. Figure 2 shows a similar split, but by buyer type and state.
The contrast between Victorian and northern markets is evident, particularly in percentile terms. While Victorian saleyard prices are around the 20th to 45th percentile levels, NSW and Queensland are only reaching a maximum of 22-23rd levels. In the drought-stricken areas of southern Queensland such as Dalby, prices remain below 300¢/kg cwt, and are at their 6th percentile rank.
Moving the analysis to buyer types, a considerable dichotomy between prices also appears. While in Victoria processors are paying more than lot feeders and restockers for young cattle, in the north the opposite is taking place. Furthermore, the average price paid for restocker cattle in Queensland is only 294¢/kg cwt, which equates to its 2nd percentile level.
What are percentiles?
Percentiles (sometimes called deciles) provide one way of estimating what may happen in the future by looking at what has happened in the past. A percentile is a measure of how often, historically, prices have fallen above or below a particular price level. However, it is important to note that percentiles are not a definitive measure of absolute price ranges. They are just one tool in your market information toolbox, and should be considered in conjunction with the other information you use. Read more about how to interpret percentiles
There are three key obvious messages deriving from this analysis. Firstly, seasonal conditions continue to impact northern and southern markets differently, with the latter faring much better in absolute price term and percentile levels.
Secondly, the expected recovery of restocker confidence is yet to occur as the average price of EYCI cattle purchased by restockers in NSW and Queensland is still very depressed by historical standards (percentiles). Lastly, the lower prices paid by northern processors reflect the ongoing large number of poor conditioned stock flowing onto saleyards.
Store cattle markets have a greater upside potential in the advent of average to above average rainfall conditions between now and April.
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