Looking ahead, despite the indicator still being at historically high levels, with recent rain and a favourable weather outlook, there is potential for the store cattle market to move with the seasonal average over coming months.
Further supporting the market will be the constant supply pressure over the rest of the year and into 2017 as the cattle herd drops to a 20-year low.
Winter usually records a lift in prices, particularly in June and July. With the EYCI starting the year close to 600¢/kg cwt and greeting winter at 582¢/kg cwt, such a seasonal upward trend would potentially put the winter peak at 630-640¢/kg cwt.
Roma Store on Tuesday demonstrated the seasonal upward price potential, with the very good quality yarding of weaners lifting the EYCI eligible cattle average 18¢/kg cwt week-on-week, to 594¢/kg cwt.
However, many other factors feed into the price equation, such as the A$ and export demand, and as also illustrated above prices have softened in the winter months in the past.
Furthermore, the EYCI is just one indicator and other classes of cattle needed to be considered, as different regions – which experience a range of seasonal conditions over the winter months – will trend in contrasting ways.
For example, finished cattle in Victoria generally trend dearer over the next three months, following a contraction in slaughter, while their counterparts in Queensland have historically eased in June before lifting in July and August. Finished cattle in NSW have historically recorded a steady to slightly dearer trend through the winter months.
http://www.mla.com.au/Prices-markets/Market-news/Cattle-market-in-good-stead-to-begin-winter-02062016
