It has been about four months since we took a look at the Meat & Livestock Online Young Cattle Indicator (OYCI) versus the saleyard Eastern Young Cattle Indicator (EYCI) and thin markets over the Christmas break saw spread behaviour get a little erratic, but prices and spreads have normalised somewhat as the year has progressed.
Early December 2023 the OYCI and EYCI prices were converging with the EYCI narrowing the price premium held by the OYCI through much of the last quarter of 2023. Indeed, through the thin Christmas and New Year trading period the EYCI managed to hold a premium to the OYCI.
Much of January and February 2024 saw the two indicators very closely aligned in price. However March 2024 has seen the OYCI return to a premium to the EYCI. Presently in early April the OYCI sits at a weekly average price of 647 c/kg cwt (369 c/kg lwt) versus the EYCI at 616 c/kg cwt.
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Analysis of the cents per kilogram price spread highlights the volatility seen at the end of 2023 with the OYCI discount to the EYCI widening, albeit briefly, to 110 cents. During 2024 through January and February saw the spread oscillate between 30 cent premiums to 30 cent discounts. However, by late March/early April the premium spread for the OYCI had widened to nearly 70 cents.
Assessment of the price spread in percentage terms shows that during December 2023 the OYCI averaged a 9% discount (or a 50 cent discount in c/kg terms). The oscillation seen in spread behaviour during January and February 2024 meant that the percentage spread over these two months was fairly flat, averaging a discount of just 0.3% in January and a discount of 0.5% in February.
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Since the start of March 2024 the OYCI spread has averaged a premium of 6.5% over the EYCI, or an average premium of 38.2 cents per kilogram. This places the spread back in line with the historic average seen since the creation of the OYCI indicator as the average spread since late 2022 comes in at a 6.3% premium or 38.1 c/kg. Currently, as at mid-April the weekly OYCI spread sits at a 5% premium, or 31.1 cents above the EYCI.
This article originally appeared at Episode3. Republished with permission.
Matt Dalgleish is Founder & Director of Episode3. Follow him on X here
