Cost of calves reshaping cattle buying patterns

Farmers are shifting their focus from heavy steers to store and feeder cattle, but why? Jenny Kelly explains.

As prices for light and young steers and heifers creep higher and higher, the attraction of growing out stock to higher slaughter weights is losing appeal.

The southern cattle market is being reshaped by the big money that has been paid, and continues to be paid, for younger and lighter animals.

It was evident at saleyards like Ballarat and Mortlake last week, where prices for heavy feeder steers and heifers rose another $100 to $150 a head on the back of limited supplies, yet these sales still boasted unusually large winter yardings of more than 3500 cattle.

As prices for light and young steers and heifers creep higher and higher, the attraction of growing out stock to higher slaughter weights is losing appeal.

It is an issue that has been raised in recent weeks, with South Gippsland agents predicting a shortage of grass-fed bullocks later this season and beyond.

online artwork June 23 jenny kelly

The graph ­illustrates why farmers are shifting their focus to store and feeder cattle.

It shows the rapid price rise for store steers over the past 12 months, with gains of more than 125c/kg since last June.

In comparison, the grown steer market, capturing bullocks, shows little sustained price improvement, only briefly being able to sit above 400c/kg liveweight once in the past year.

Tracking between these is the feeder steer market, which has risen about 60c/kg since June last year, noting these prices being graphed are taken from weekly prime markets, and if rates from store sales were included they would show bigger gains for store and feedlot animals.

The current cattle market, influenced by the season and herd rebuilding, has a distinct sweet spot in terms of size that cuts out at about 500kg liveweight. Anything above this weight quickly loses value in cents-a-kilogram terms.

Consider these dollar-a-head prices out of the Ballarat store market last week.

The top price of $2720 was for 11 Angus at 627kg, representing 433c/kg.

The next pen sold made $2660 for 11 Angus weighing 585kg, improving to 454c/kg. The same vendor then had a lighter pen in at 515kg, which made just $40 less at $2620, working out to 508c/kg.

The price versus weight outcome becomes more pronounced as lighter and younger cattle are sold.

Again out of Ballarat, agents reported 411kg yearling-age Angus steers at 411kg making $2250, representing 547c/kg; and 308kg calves at $1760 or 580c/kg. Under 300kg and prices regularly made more than 600c/kg.

TB White and Sons agent Xavier Bourke, Ballarat, said these price trends were reshaping the market as southern farmers quit young cattle for the higher price rates and quicker returns on offer.

Mr Bourke said the way the strong store market was dragging cattle out would reshape the spring, with calves that would normally be grown out in the area already being sold.

“We are seeing spring-drop calves that would normally be carried over until November or December (in the Ballarat area, which has a later spring season) being sold now,” he said.

“Everyone is taking the money and it could create a big shortfall of cattle later on.’’

Northern markets continue to exert the most influence on young cattle pricing, buoyed in recent weeks by consistent rainfall across most of NSW and into Queensland and the forecast of a wet winter extending into spring.

This northern buying was again the powerhouse behind the Eastern Young Cattle Indicator hitting a new record high of 917c/kg carcass weight on Monday.

A breakdown of the EYCI data shows it was all the major Queensland and NSW prime markets that sat above 900c/kg in the past week; all Victorian saleyards were under this level.

And again highlighting the extreme money for light cattle, the average cost of vealer steers in the EYCI selling to the paddock (by virtue of their age they have less weight, the majority under 280kg) was $10/kg.

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