The past couple of years has seen an increase in Wagyu bulls depastured to Angus cows.
This increased breeding activity has seen the premium of Wagyu F1 steers to the Eastern Young Cattle Indicator (EYCI) fade away during 2018.
The Wagyu F1 steer indicator reached its monthly average peak in November 2016 at 1438¢/kg cwt.
However, the 2018 season has been unkind to the F1 Wagyu steer.
By October 2018, the Indicator had declined by 65pc to see the monthly average sit at 500¢/kg cwt, a mere 2pc discount to the EYCI (Figure 1).
Analysis of the historic Wagyu F1 steer spread to the EYCI shows that since July 2015 the monthly spread has averaged a premium of 68pc to the EYCI, with a normal range of 41pc-95pc premium spread.
An obvious logic behind the falling Wagyu premium levels would be a flood of Wagyu cattle hitting the market.
However, the analysis of monthly and quarterly volumes trading on the AuctionsPlus system doesn’t appear to suggest the decline in the Wagyu premium is volume related.
There is plenty of anecdotal evidence to suggest that F1 Wagyu numbers being sold direct have grown and the Australian Wagyu Association annual report indicates that crossbred joining’s have increased by 89pc in the last four years.
During the first half of 2018, the quarterly average sales volumes of all Wagyu cattle sold via AuctionsPlus were sitting 49pc above the long-term monthly levels.
However, since July Wagyu volumes have dropped away, and the quarterly average volume is now trending 63pc below long-term levels (Figure 2).
What does it mean?
Evidently, there is more to this story than what the AuctionsPlus data can show and it is unclear if the AuctionsPlus data is reflective of the entire F1 Wagyu market.
Access to transparent market data, like the data that is available under the AuctionsPlus system, would be of benefit to the entire Wagyu industry as analysis could be undertaken to determine the current (and future) supply and demand scenario facing industry participants.
