High EYCI could be the new norm

It's been so useful for producers to be able to buy and sell on a high market this past 12 months, allowing people to get out of stock they'd bought as a trade and then begin their herd rebuild.

The rain has certainly kept things firing along, and it has been amazing to see the Eastern Young Cattle Indicator hit yet another record high this week, jumping 33 cents in a week to 896.50 cents a kilogram (carcase weight) by the close of Monday's sales.

This is about a 30 per cent increase on year-ago levels, which is phenomenal but maybe not surprising given the historically strong prices through the drought. It is also 23.5pc higher than the August 2016 peak when we had a record wet winter.

So how long can these prices last?

With good rain in some areas of Queensland that were otherwise in drought, there will likely be new restockers entering the market with a fresh bout of grass fever, but they'll have to be ready for the ride.

It's been some months now that we've been hearing of restockers going home empty handed amid the tight supply and high prices. Others are simply accepting the prices and meeting the market.

One of the insteresting outcomes of this has been the high levels for females, with it not so unusual now to see heifers match or exceed steers, especially in the weaner-to-yearling age range.

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Restocking, but at what cost to the budget

We've seen prices for restocker females hit new highs, with heifers through to cows having reached figures in the $4000s in the past six months. Ten years earlier, off the back of another wet run in 2011, record PTIC Angus females were hitting around $3050, meaning the upper end of the breeder market has lifted about 25pc in a decade.

With a great start to autumn in many areas, it would seem producers are going to be in a good position heading into winter, which along with the rain in Queensland makes NAB's prediction of an EYCI average level of 850c/kg from here to the middle of the year seem very reasonable.

The predictions from last year of the EYCI reaching 1000c/kg seem beyond us for now (especially having dropped again to 883c/kg by Tuesday night this week).

It may be though that this is a new 'new normal'. While the market will drop as the rebuild progresses, there is now a good case it will remain permanently above the long-term average.

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