After what has been a solid month for equities and bond investors, month end flows have probably play their part in the price action overnight, US equities have lost momentum, UST have led a rise in core global bond yields and the USD is stronger. US and European inflation releases favoured the notion the Fed and ECB are done with their respective tightening cycles.
In Focus: Beef – November 2017
The Australian beef cattle industry has enjoyed a great run over the past couple of years, with the Eastern Young Cattle Indicator (EYCI) hitting a record over 720c/kg in September last year.
- The Australian beef cattle industry has enjoyed a great run over the past couple of years, with the Eastern Young Cattle Indicator (EYCI) hitting a record over 720c/kg in September last year. Prices this year have generally drifted lower, although recent rain in Queensland and New South Wales has seen prices jump again. The EYCI currently stands in the high 570s range.
- Importantly, a major driver of Australian cattle prices has been the impact of seasonal conditions on restocker interest rather than global fundamentals. This makes forecasting cattle prices an exercise in forecasting weather patterns – a tough ask at the best of times, but even more difficult amid one of the unpredictable Australian seasons for some time.
- In the short term, the restocker story is likely to remain ascendant, although ultimately Australian prices cannot remain detached from global fundamentals forever. With the US cattle herd rebuilding, grain remaining very cheap globally and South American producers improving their position, we see price pressures in Australia as downward. Our view for some time has been that the EYCI will fall to 500c/kg, but the timing has been a challenge to pick. If the weather swings back to drier (as the latest BoM outlook shows), the EYCI could yet see a 4 in front of it in 2018.
For further details, please see the attached report: