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Sunny outlook for the cattle industry as EYCI continues to climb

With recent periods of drought followed by exceptional rainfall, it’s an interesting time to consider current cattle industry trends. Much of eastern Australia received average September rainfall in the first half of the month, promising improved prospects for the grass-fed industry.

Meat & Livestock Australia (MLA) has released a map showing where the cattle herd has generally shrunk across the country since its peak in 2012-13. Current estimations suggest that the herd is sitting at a 20-year low of 26 million animals, though increases are predicted on the back of 2016’s high rainfall. Although herd numbers are lower than usual, MLA’s industry projections show some increase in animal size based on a greater number of cattle on feed, a reduction in the proportion of females sent to slaughter, and lower than average stocking rates at the autumn break.

Unsurprisingly, periods of drought have driven a decline in the herd in most of Queensland. Western NSW saw a drop in herd numbers of more than 41 per cent over the three-year period. Declines of 11 to 30 per cent can also be seen along the NSW coast, while some inland areas have increased herd sizes up to 10 per cent. While mostly in decline, the NSW northern rivers and northern tablelands areas still retain the highest numbers of cattle among NSW regions. Increases in herd numbers are seen in Western Australia, particularly around the wheatbelt and Great Southern regions, however these numbers are up from a low base. 

The effects of more favorable weather conditions can also be observed in the record-breaking surge of the Eastern Young Cattle Indicator (EYCI). In August 2016, the EYCI hit an all-time high of 700c/kg, with some store sales seeing prices improve by more than 140c/kg on August 2015 prices. Restockers and lotfeeders have largely driven the climb of the EYCI with processors buying proportionately less stock this year. Market conditions show similarities to the 2010-11 season, which demonstrated comparable reductions in slaughter rates. 

Production is expected to continue declining before a recovery in 2017, with herd numbers normalising in early 2018. Continued favorable rainfall and a squeeze on supply will likely see the EYCI remain buoyant in the near future.

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