Young cattle surge to 563.5c/kg

The Eastern Young Cattle Indicator (EYCI) has also continued its recovery climbing above 550c/kg (carcase weight) on Monday.

By Tuesday night the indicator had hit 563.5c/kg which was 23.5c/kg higher than at the same time a week ago.

Sales on Monday at Forbes, Tamworth and Wagga were standouts for market strength and all averaged above 560c/kg for young cattle.

It appears to be yearling steers dragging the market higher.

For example on Tuesday yearling steers contributed 54.5pc to the EYCI calculation and averaged 595.7c/kg, while yearling heifers were averaging about 40c/kg lower.

Mecardo analyst Augusto Semmelroth was of the view that the even though the EYCI had rallied it remained undervalued.

"Despite the record prices this year, cattle market performance has been largely tempered by ongoing challenging conditions."

Mr Semmelroth said this was particularly the case for store and young cattle.

As the herd approaches a forecast 20-year low of 26.1 million head in 2016, he said young cattle would become a rare commodity.

"We have been repeating this for two years now, but we will highlight it again," he said.

"The EYCI remains fundamentally undervalued against finished lines.

"This means that the indicator remains around parity to heavy steer prices.

"This is a clear indication that restocker demand remains lacklustre and the forthcoming impact of the herd rebuild phase is yet to be felt."