Cattle prices are currently at their lowest in four years, prompting industry experts to delve into historical data to determine if this trend aligns with typical market cycles.
Matt Dalgleish, an industry analyst and co-founder of independent analysts EP3, has examined livestock price figures spanning the past 50 years. To provide a clearer picture, he adjusted these figures using the Consumer Price Index, a measure of inflation, to obtain the “deflated” or “real” value.
Dalgleish explained that the purchasing power of money has changed over time, highlighting that $12 in the 1970s had greater value than the same amount today. To gain a comprehensive understanding of cattle prices in real terms, he used deflated figures dating back to the 1960s.
Since the Eastern Young Cattle Indicator (EYCI) was only introduced in 1996, Dalgleish compiled early young cattle saleyards data from Victoria, NSW, and Queensland to create an indicative measure for the past 63 years. This makeshift indicator approximates what the EYCI might have been based on the weight of cattle sold during those times.
To determine what constitutes a “normal” cycle, Dalgleish converted the EYCI, given in $/kg carcase weight, to $/kg live weight and then equated it to a 300kg animal. When adjusted for inflation, the long-term average for young cattle stands at £936 per head. Historically, prices have fluctuated between $620 and $1250 per head.
Presently, cattle prices are nearing the lower end of this range, with a 400c EYCI equating to roughly $650 in real terms. Although the market is at a cyclical low, it hasn’t reached the extreme pricing witnessed in recent years, where the adjusted EYCI surpassed $2000.
Dalgleish concluded that while the market has seen a significant decline, it has been lower in real terms in the past. He also noted that cattle prices are not as low as mutton prices, which have fallen outside the typical range.
