One question that always arises when we are talking about Australian cattle prices is what is the "market"? Is it Angus steers sold at Ballarat, or Grain-fed Japan Ox in Queensland - the term "market" means different things to different people.

Possibly the best indicator of the Australian cattle market is the Eastern Young Cattle Indicator (EYCI). The EYCI is a 7 day rolling average price involving 24 young cattle categories (yearling steers, heifers and vealer steers and heifers) and 26 major prime sale yards stretching from southern Victoria to Queensland.

At each sale the Livestock Marketing Officers from NLRS collect all the qualifying young cattle prices and send them to their head office in Sydney. After the completion of all sale-yards NLRS take an average of the young cattle prices over the past seven days and produce the EYCI.

Each week an average of 13,000 cattle go into determining the EYCI with cattle sales stretched from Queensland to Victoria, making the indicator extremely difficult to manipulate.

There has been some discussion as to why young cattle were chosen to be an indicator, not bullocks or cows as they are closer to the beef consumer. The fact is that when producers sell bullocks they move back into young cattle and the profit made from the last trade invariably affects what they are willing to pay for young cattle, making the young cattle market an excellent guide to the direction of the Australian cattle industry.

The young cattle market was also chosen as an indicator of the Australian market because it is the most transparent cattle market in Australia; it attracts the largest number of buyers and sellers in an open auction system than any other cattle category in Australia.

Despite the EYCI being based on young cattle it has a good price relationship to all cattle categories throughout the entire cattle supply chain. From milk calves to grinding beef prices every cattle category that Ag Concepts has seen has a strong relationship to the EYCI - even Western Australian cattle prices have a good relationship to the EYCI.

The EYCI also provides a guide as to how you have bought or sold relative to the entire Australian cattle market. It is a good idea to calculate your own purchase and sale prices relative to the EYCI as this allows you to use the MLA/SFE Cattle Futures to 'lock-in' prices.

The MLA/SFE Cattle Futures are a forward market for the EYCI where buyers and sellers come together to determine what they expect the EYCI to be in the future. The Cattle Futures are an excellent guide to what direction the Australian market is expecting to receive up to 18 months in advance.

The Cattle Futures also perform the purpose of allowing buyers and sellers of cattle to 'lock-in' prices in advance.

If you understand how your cattle prices relate to the EYCI, the Cattle Futures can provide forward prices for your cattle every weekday of the year irrespective of who is the buyer or seller.

The robustness, transparency and strong price relationship to all cattle categories makes the EYCI an excellent indicator of the health of the Australian cattle industry.

Daily EYCI values are available from MLA's National Livestock Reporting Service, or the EYCI website at www.eyci.com.au.

More information regarding the MLA/SFE Cattle Futures, or the EYCI, is available at www.cattlefutures.com.au.