Prices for young cattle on the AuctionsPlus platform have been increasingly outperforming the sale yard prices being achieved for young cattle across the east coast in recent months.
As at 14th October 2023 the Eastern Young Cattle Indicator (EYCI) as reported by Meat & Livestock Australia has fetched an average price of 362 c/kg cwt compared to the average price of 436c/kg cwt achieved by young cattle being sold on the Auctions Plus platform for the same time frame.
This represents a premium spread in favour of young cattle on Auctions Plus of 20%. A look at the historic spread for the Auctions Plus Young Cattle Indicator (AYCI) versus the EYCI highlights that it is not uncommon to see the AYCI run at a premium to the EYCI. Indeed, the long run average spread sits at 13.6% (from June 2015 to September 2023).
Analysis of the seasonal variation in the spread between the AYCI and the EYCI demonstrates that for most of the year the spread sits between a premium of 5% to 20%, in favour of the AYCI.
For much of the first half of 2023 the AYCI spread ran at a premium spread above the seasonal average pattern, as indicated by the black dotted line. However into August spreads deteriorated to their lowest level this year dipping to a meagre 3% premium over the EYCI in the second week of August.
The AYCI spread to the EYCI rebounded quickly to more normal seasonal levels into early September and by the end of the month had started to widen to stronger premiums just beyond the upper boundary of the “normal” seasonal range, as outlined by the grey shaded 70% range.
This range denotes where the spread spends most of the time and has been within this grey shaded area for around 70% of the time since 2015. It represents one standard deviation in spread variation around the average and could be best considered as the “normal” seasonal spread behaviour.
As the 70% range shaded area demonstrates there is often increased volatility in spread behaviour during spring and this is evident by the grey 70% range widening through September and October. This suggests that it is not uncommon for the AYCI to EYCI spread to make an annual peak or trough during this time.
With that in mind, it is probably somewhat expected to see the current spread surging beyond the normal range as we head into October. But as previous patterns show these peaks/troughs in spread outside the normal range don’t last for long.
Each fortnight Episode3 will release analysis that compares price behaviour for different categories of livestock on the AuctionsPlus platform and compares how these online indicators are faring compared to the physical livestock markets.
Stay tuned for the next instalment when we take a look at the AuctionsPlus Restocker Lamb Indicator.
Note – This article was originally published using sales data from midway through the week (for the week ending 14th October) and not all weekly sales had been recorded at that stage. This analysis has been updated to reflect the additional online sales data that came through later in the week.