Over the Top and Down the Other Side of the Cattle Price Mountain

While 2022 registered an exceptional rally in cattle prices, with the EYCI reaching record heights and the continuation of high commercial and stud cattle prices across the board, there is no denying that the price pinnacle for the market has passed. The reorientation of cattle prices back to a more “reasonable” level at the start of 2023 has producers feeling the pinch, as confidence across the market indicates cautious and calculated purchasing. With weaner sales in full swing, recent price trends indicate the market for young cattle is averaging approximately 20-30% cheaper from the same time last year.

As we enter a third year of positive seasonal conditions, the momentum of restockers has begun to fade away as the cattle “rebuild” shifts into an “expansion” phase (CLICK HERE to read the 2023 cattle forecast) The larger supply of cattle in the market has supported downward pressure on prices, as market fundamentals point to a considerably cheaper market this year compared to the historical highs of 2022.

The first two weeks of January saw AuctionsPlus interface a total of 25 weaner and breeder cattle sales. Figure 1 highlights the percentage change in average price across each sale in 2023, compared to the previous year. Across the sales in 2023, the average sale value sat 14-31% cheaper compared to the previous year. Steer sales in 2023 averaged 29% cheaper, while weaner heifer sales averaged 17% cheaper than 2022. Across all interfaced weaner sales for the first two weeks of January average prices eased 26% from 2022. The narrower margin in year-on-year heifer prices across the opening cattle sales for 2023 reveals buyers continue to look at heifers with more trading opportunities, as increased supplies look set to underpin the cattle market in 2023.

Figure 1: A year-on-year comparison of the percentage change in average price of weaner and breeder cattle sales interfaced with AuctionsPlus in January 2022 & 2023.

The commencement of 2023 cattle sales on a cheaper footing reverberated across the cattle market, with the EYCI continuing its downward price rally from the end of 2022, with the most recent low for the indicator sitting at 767.90c/kg cwt (16^th January). Compared to year-ago levels, the EYCI is back by over 400c/kg cwt – a 36% year-on-year decline. Aligning with the broader market trend, AuctionsPlus commercial cattle sale results from Friday 13^th January had both young steer and heifer categories tracking 28% and 27% cheaper than the corresponding period in 2022. Diving further into historical price data, current AuctionsPlus weaner and yearling average prices are sitting just 8% and 6% behind the same period in 2021 for steers and heifers, respectively. 2020 prices indicate the impact of a turn in seasonal conditions and shift to restocking in the cattle market, where average steer prices in 2023 are 43% higher than 2020, while average heifer prices are 33% higher. With the cyclical nature of the cattle industry in mind, prices remain historically good, however, the speed of price decline coupled with the rising input costs will have many participants taking a very cautious approach.

Figure 2: Average EYCI for the month of January from 1997-2023.

Figure 3: AuctionsPlus commercial steer and heifer categories % change in $/head value between January 2022 and 2023.

Figure 5: AuctionsPlus commercial steer average ($/head) for early January 2021 ,2022, 2023

Across regular AuctionsPlus commercial cattle sales for the beginning of January, steer prices on a $/head basis are averaging 28% cheaper than the same period in 2022 and 8% back from 2021 (figure 3). The standout prices from 2022 are clear, with early 2023 pricing providing a strong indication of cattle prices returning towards “normal” following a record price rally.

Figure 6: AuctionsPlus commercial heifer average ($/head) for early January 2021,2022, 2023

Prices for young weaner heifers weighing in the 330-400kg and 400kg+ categories registered the smallest shift in prices from 2022 – back by 21% and 27%, respectively, as demand for heifers ready to join remains robust. Compared to 2021, both categories sat relatively firm with 330-400kg heifers averaging $44 higher, at $1,692/head, while 400+kg heifers contracted by $47, to average $1,760/head. Compared to 2022, comparatively lower clearance rates across all heifer categories highlight ongoing selective buying with demand for well bred, quality lines of heifers remaining robust.