A few years ago Meat and Livestock Australia put out an interesting piece on the Eastern Young Cattle Indicator (EYCI) which looked at the direction the young cattle market went in January each year and compared it to the annual change in the EYCI for that year. The original analysis was back in 2015, if memory serves me correctly, and it showed that often the January price result was a pretty good indicator for the yearly direction.
The January price direction “compass” was not so accurate in terms of showing the magnitude of change, but simply if the EYCI went up or down in January did it accurately signal an annual EYCI rise for the rest of the year or an annual EYCI decline? A revised look at this analysis shows that for the last 25 years of EYCI reporting the direction up or down that the EYCI took in January matched the annual movement that year 68% of the time.
Indeed, as the histogram highlights only 8 of the last 25 years the EYCI movement in January did not lead the way and accurately show the direction the rest of the year would take. The EYCI opened at 1162.8 c/kg cwt this week, keep your eyes peeled for the January 2022 closing price as it may give us a clue for the rest of the year.*
*Note – there is no robust forecast ability assigned to this method of predicting young cattle price movements.