What if the young cattle market falls as quick as it rose?

By any expectation, the record-breaking “bull” run of the cattle market throughout 2021 has been nothing short of phenomenal. Show me a producer who at the start of 2021, was making marketing decisions for an EYCI at 1,100c/kg in mid-November! Remember, the first EYCI reading for 2021 was 830.75c/kg cwt.

While there are several ways to forecast where the EYCI will go in 2022, the main drivers that facilitated the rise to its current level will remain constant driving forces into the future – namely seasonal conditions & producers’ willingness to “pay the price” to secure suitable supplies. If the 2022 season looks to be less than 2021, so will the price, and just as importantly, so will producer willingness to buy into a falling market.

But what if the market in 2022 was to unwind at the same pace that it increased in 2021? Where would we be price wise? As previously mentioned, the EYCI started 2021 at 830.75c/kg cwt, cracked the 900c barrier in mid-April, hit 1,000c only 99 days later in late July, then last week 1,100c – some 118 days later.

Using the 1,100c as a starting point and reversing the 118 days it took to get there, we could then expect the EYCI to drop below the 1,000c barrier in mid-March 2022 - following what is shaping up to be a very strong weaner market. Extrapolating further, going out another 99 days, the EYCI would be back within the low 900’s by late June 2022. Taking it to the next milestone, 174 days later, the EYCI would be flirting with the 800c barrier in the final weeks of 2022.

So, let’s just lay that out for 2022:

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Mid-March = 1,000 c/kg cwt
Mid-June = 900c/kg cwt
Late December = 800c/kg cwt
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While normally “bearish” on price outlooks, my initial thoughts of this market symmetry for 2022 is that these timeframes are very possible – and are probably as good an indicator as any of how and when things can change with the young cattle market in 2022. The possibility of remaining in “four-figures” through to March 2022 will hinge upon Queensland and its wet season, along with the early supplies of weaner.

On the other hand, given the volatility of markets, it would not be amiss to see the market back in the very high “three-figures” when everything gets cracking again in late January 2022 – while this would be around a 10% decline, it still only takes the market back to its mid-winter 2021 levels.