Tightening supply has seen Australia's major indicator of cattle prices soar to a new record level.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Listen Duration: 5 minutes 19 seconds 5 m MLA's Ben Thomas says tightening supply has pushed the EYCI to a new record ( Craig Zonca ) Download 2.4 MB

The Eastern Young Cattle Index (EYCI), a rolling average of prices, has jumped to 605.25 cents per kilogram carcass weight, fuelled by strong demand at saleyards in Queensland and New South Wales.

EYCI eligible cattle, which includes vealer and yearling cattle over 200 kilograms, fetched 631 cents per kilogram in Roma and 615 cents per kilogram in Gunnedah on Tuesday.

Much of the price rise is being driven by re-stockers looking to boost their herd numbers after recent rain.

'Precarious' position says MLA

Meat and Livestock Australia (MLA) market analyst Ben Thomas said that despite the new record high, the EYCI had had one of its "flattest" starts to the year.

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"I think that highlights how almost precariously poised it is," he said.

"On the one hand, you do have those expectations of much tighter supplies, but then on the other hand, we've got a few things that we really need to keep our eye on."

Namely, that is the increased competition from Brazil in the global beef market and the slow down in demand from the United States for Australian meat.

Two major customers for Australian beef, China and Saudi Arabia, have removed bans on beef from Brazil, with the South American powerhouse moving quickly to re-establish trade.

Current highs still below 1970s peak

Australian red meat processors are certainly feeling the squeeze, with the major players JBS and Teys Australia announcing production cut-backs in recent weeks.

"There are tighter supplies, not just through the saleyards but coming forward for processing," Mr Thomas said.

In the past week, there were only about 134,000 head of cattle processed, down 23 per cent on the same time last year.

"The beginning of last year was when we were at our record Australian processing rates, so we are comparing one extreme to the other," Mr Thomas said.

While the EYCI may suggest "excellent" prices for producers, Mr Thomas said in real-dollar terms, the current highs are still below the peak of the late 1970s.

"If you were to convert those prices to 2015 dollars, the EYCI equivalent would have been 750 cents," he explained.

Mr Thomas said he was confident the strong start to the year would see the EYCI average higher than its 2015 level of 510 cents per kilogram.