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Tuesday, January 15, 2019

Angus survives another grilling

By Matt Dalgleish  |  Source: MLA, AuctionsPlus, Mecardo

Key points

  • EYCI eligible Angus cattle sold on AuctionsPlus follow a similar average monthly price pattern to saleyard EYCI sales, as reported by Meat and Livestock Australia.
  • Historically, the Angus cattle sold on AuctionsPlus tend to attract a premium of around 5% on average and usually range between a 0-10% premium.
  • In recent years, the Angus premium has been improving with the 2018 annual average premium recording the highest annual level in six years at an 8.7% premium.

 

2019-01-15 Cattle 1

 

2019-01-15 Cattle 2

During the middle of 2017, Mecardo looked at Angus premiums to the Eastern Young Cattle Indicator (EYCI). This analysis piece provides an update to the Angus spreads according to AuctionsPlus Angus cattle sales data.

Click here to recap on the original Angus piece from 2017.

Average monthly price data on a live weight basis has been produced comparing the EYCI eligible cattle, purchased by restockers, to Angus steers and heifers weighing between 200kg to 400 kg live weight with a fat score between 2 and 3 (Figure 1).

The Angus cattle prices from AuctionsPlus have been filtered by this criterion to best reflect EYCI type cattle. The price behaviour between the Angus cattle continues to show a remarkably similar pattern to the broader cattle breed types that make up the EYCI.

Since 2012, the Angus cattle has tended to achieve a premium over the EYCI. However, in recent years the premium appears to have widened.

The percentage spread pattern between AuctionsPlus Angus and the EYCI on a monthly basis is outlined in Figure 2. The percentage spread (green line) has varied between a 10% discount to a 15% premium, while the long-term average premium spread achieved across the entire 2012 to 2018 period has been 5.3%, as highlighted by the black dotted line.

The shaded grey zone indicates that for 70% of the time the Angus spread has fluctuated between a 0% to 10% premium to the EYCI. The red dotted line outlines the annual average spread for each year. It demonstrates that since 2016 the Angus spread to the EYCI has been improving – moving from a 1.8% premium in 2016 to an 8.7% premium over the 2018 season.

What does this mean?

As our original Angus analysis suggested, factors such as larger lot sizes being available on the AuctionPlus platform and additional information provided by the online provider could be a factor as to why buyers may be prepared to pay a premium.

Irrespective of the reason, the widening spread for Angus cattle on the AuctionsPlus system in recent years signifies that either Angus cattle or the online platform are becoming more popular.

Mecardo information is provided to assist in your marketing decisions. It contains a range of data and views on the current market. It is not intended to constitute advice for a specific purpose. Before taking any action in relation to information contained within this report, you should seek advice from a qualified professional. The information is obtained from a variety of sources and neither Mecardo nor Ag Concepts Advisory will be held liable for any loss or damage whatsoever that may arise from the use of information or for any error or mis-statement contained in this report. 

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