You can Wagyu your own way

Livestock | 26th August 2021 | By Matt Dalgleish

The Snapshot

  • Average monthly F1 Wagyu prices have rallied strongly throughout 2020 and are nudging 1800 c/kg cwt as of August 2021.
  • Since 2015 the F1 Wagyu to EYCI spread has averaged a 47% premium, with a normal range in the premium of 8% to 85%.
  • Currently the monthly spread of F1 Wagyu to the EYCI is sitting at a 76% premium.

The Detail

The meteoric rise of young cattle prices has been capturing the attention of beef market commentators of late with the Eastern Young Cattle Indicator  (EYCI) forging above 1000 c/kg cwt, but it isn’t the only category of cattle making fresh price highs.

F1 Wagyu prices have also regained their mojo. More specifically, F1 Wagyu heifers and steers that are within the 200 to 400 kg weight banding which also fit the weight range of cattle that are included within the EYCI calculation.

Filtering Auctions Plus sales data for F1 Wagyu types that are similar to EYCI cattle types we can see that average monthly F1 Wagyu prices have rallied strongly throughout 2020 and are nudging 1800 c/kg cwt as of August 2021.

The 2018/19 season saw a rush of F1 Wagyu, which are classified as crossbred wagyu cattle that have at least 50% wagyu genetics. During the glut F1 Wagyu types of lower quality flooded the market with many finding their way onto the Auctions Plus (AP) platform to be sold discounted to what was being achieved via direct sales.

The result was a period of time when F1 Wagyu on AP was running at a discount to the EYCI and the published F1 Wagyu prices were not reflective of what was being achieved privately through established channels between counter-parties with long standing trading relationships.

As the percentage spread pattern between F1 Wagyu and the EYCI highlights, in recent times the premiums have returned to levels that are consistent with the upper end of the normal range. Since 2015 the F1 Wagyu to EYCI spread has averaged a 47% premium, with a normal range in the premium of 8% to 85%.

Movements in the spread would be considered extreme, based on the historic variation, when below a discount of 30% or above a premium of 125%. Currently the monthly spread of F1 Wagyu to the EYCI is sitting at a 76% premium.

If you liked reading this article and you haven’t already done so, make sure to sign up to the free Thomas Elder Markets email update hereYou will get notified when there are new analysis pieces available and you won’t be bothered for any other reason, we promise. If you like our offering please remember to share it with your network too – the more the merrier.

Tags

  • Wagyu
  • Beef
  • Cattle
  • Spreads