On Friday, live cattle prices improved due to the effects given by the continental-scale drought in Australia.
Live cattle futures for April delivery increased by 0.81% to $165.43 a pound on March 03’s Asian afternoon session.
The Eastern Young Cattle Indicator (EYCI) dropped into the 600s, marking its first time since early 2020. On March 03, the benchmark indicator reached 699.95c/kg (dressed weight equivalent). It fell into a level not seen since February 2020.
Moreover, it has plunged aggressively since mid-November last year, plummeting to 64c/kg over the previous month. Also, it is 415c/kg lower than where it was this time last year.
Meanwhile, in late February 2022, it saw large portions of eastern Australia under floodwater. The situation dramatically limited access to live cattle and sale yards for a while.
However, according to analysts, there is likely a factor of price exhaustion. Buyers cope with prices as the young live cattle market performance has been observed for the last two years. Also, consumers’ resilience with the costs is being stress-tested.
On the other hand, they added that a patchy summer rainfall season had weakened demand. The slowdown took place apart from the regions in far north Queensland.
They mentioned that in parallel with the drop in restock buying activity, there are some rebounds from traders.
HPAI Impacts Live Cattle Costs
Costs of live cattle were raised due to the detection of highly pathogenic avian influenza (HPAI).
While Brazil survived the emergence of HPAI, its beef industry was less lucky. The disease caused a loss in the markets. When it raised its dangerous head again in February, it was detected in Par á.
On a bearish note, China, Brazil’s main export point for live cattle beef, suspended purchases from the country. The export halt was not its first time as other countries like Thailand, Iran, and Jordan followed.
Also, as the suspension in Brazil for the product is likely to be short-term, its live cattle prices are already reported to be plunging.