Cattle market shifts toward export demand and sales

Feeding lambs has paid dividends this year, but how does pouring grain and feed into domestic weighted trade cattle compare?

The beef market is becoming more entrenched in export demand and sales. Picture: David Martinelli

Feeding lambs has paid big dividends for farmers this year, but pouring grain and feed into domestic weighted trade cattle hasn’t proven so lucrative as the beef market becomes further entrenched in export demand and sales.

The price difference, or lack of it, between top end trade cattle and manufacturing grades such as cows is being talked about this winter.

On figures published by the National Livestock Reporting Service the top end grain-fed yearlings have mostly been selling in a range of 380c/kg to 460c/kg liveweight, while cows have reached up to 390c/kg in the past week.

Translated into carcass weight terms, it means the better quality trade cattle are trending around 780c/kg to 790c/kg while the best runs of slaughter cows are costing up to 730c/kg for a gap of less than 60c/kg.

To look at it in detail the best run of yearling heifers with muscle shape (mostly European-cross such as sired by a Limousin or Charolais) sold to 440c/kg and averaged 421c/kg liveweight at Wagga Wagga in the NSW Riverina on Monday, converting to a carcass cost of around 790c/kg, according to NLRS calculations. The lead of the beef cows sold to 373c/kg at over 730c/kg on a carcass basis.

The cost structure of grain feeding a yearling to 400kg-plus compared to the slaughter refund from a cow off grass which has already been productive in producing calves is very different, leading to the argument that quality trade cattle are “not making enough”.

There is actually no easy way to compare the current trend of trade cattle at auction to manufacturing grades and cows, as the main saleyard indicators published by Meat and Livestock Australia are all feedlot, restocking or export related.

However if you go back to the heady seasons of 2021 and 2022 when livestock markets were buoyant, it is a fair summation to suggest that fed domestic cattle are currently the poor performers of the auction sector and tracking more behind than usual.

Using Wagga Wagga as the benchline as it has the biggest weekly cattle and lamb market in the south. This time four years ago (in July 2021) the best cows sold to 374c/kg while the best trade steers were at 536c/kg (about 80c/kg better than current returns). At the same time trade lambs were at 900c/kg to 1000c/kg carcass weight.

In July 2022 cows were selling to 374c/kg and trade cattle at 520c/kg, while lambs were at 750c/kg carcass weight.

Compare this to the current price points of up to 390c/kg for cows, $11/kg and $12/kg carcass weight for quality trade lambs, while trade cattle have yet to get close to 500c/kg plus like in 2021 and 2022.

Domestic cattle buyers told The Weekly Times the market lacked momentum due to slow demand for beef at retail and wholesale levels, coupled with the fact many of the main buyers have reliable supply channels from regular feeders for the limited number of top end trade cattle needed each week which takes pressure off the auction system.

Ultimately the price trends highlight the on-going shift of the beef market in Australia towards export demand and sales, with the younger cattle market now driven by feeder sales rather than any significant domestic processing strength.

On the export front the US cattle market has continued to strengthen on some more curve balls thrown by US president Donald Trump in terms of another spate of tariff threats.

President Trump has threatened to impose an additional 50 per cent tariff on imports from Brazil which has grown to become a major supplier of grinding beef to the US.

In 2024 Brazilian beef accounted for 2.4 per cent of overall beef consumption in the US, not that far behind Australia’s share at 3.9 per cent, according to data from US market analysts Steiner Consulting.

However, this year Brazilian beef has moved ahead of Australia to account for 5.4 per cent of overall US beef consumption, with Australia tracking at 4.5 per cent – the improvement from both countries linked to the US having to import more beef due to falling production in its own cattle supply system.

Steiner said as Brazil already faces a 36.4 per cent tariff on its beef exports, an extra 50 per cent on top of this would virtually prevent Brazilian exporters from selling into the US.

In the short-term there is some speculation Brazilian exporters could try and rush more beef through into the US before the August 1 deadline for the new 50 per cent tariff, which could dull demand from Australia. But in the longer-term if Brazilian meat was pushed out it could help Australian beef sales to the US, but noting more South American meat would then be diverted into Asia affecting Australian sales into this region.

Ultimately Trump’s tariff bombs just disrupt the market and cause uncertainty.

Steiner said there hadn’t been a significant reaction to President Trump’s latest move as it was unclear whether the tariffs would actually go ahead.

“Wether this 50 per cent tariff goes ahead, or is scaled back or delayed, as has happened repeatedly in the past three months remains to be seen,” Steiner’s report said.

“It’s also unclear whether such a tariff would survive legal challenges. Thus far the legal basis for these tariffs has been a national emergency declaration tied to trade deficits, but the US currently runs a trade surplus with Brazil.”