Figures show big changes in markets over time
Exclusive market data compiled by livestock expert Jenny Kelly reveals who is buying the most cattle — and the average price they pay.
“Prime market” might conjure up images of fat or slaughter-ready cattle selling to an eager field of professional meat buyers bidding on behalf of export and domestic abattoirs.
But in reality, meat processors are playing a smaller role in these weekly auctions, which are now dominated by feedlots and restockers.
The Weekly Times looked into industry data following recent remarks from agents like Alister Nash, of Charles Stewart at Camperdown, commenting on the big sell-off of spring-drop calves this autumn.
“If someone had said to me five years ago in Western Victoria we’d have a store sale this big (5300 cattle at Mortlake in May), I would have laughed at you,” he said.
“There’s been a lot more cattle sold through the store sales, and less through the fat pens. The industry is changing.’’
The change is quite dramatic when viewed over time. And what it points to is a processing sector now heavily reliant on grain-fed beef, and this in turn is creating a scenario where more southern bred cattle are selling north for finishing.
Also in the figures, but harder to quantify, is a shift to direct selling to meatworks instead of the auction system.
Three key sets of figures tell the story.
The first is a breakdown of buying power for young cattle included in the Eastern Young Cattle Indicator. These better-bred beef yearlings and vealers (they have to be C-muscle to go into the EYCI) go into one of three buying streams – processors, feedlots and restockers.
A decade ago meat processors were buying 34 per cent of the steers and heifers in the EYCI. Today it has more than halved to just 15 per cent, according to figures provided by Meat and Livestock Australia. The graph tracks the change since 2010.
It has been a consistent decline that has gathered pace in the past five years, possibly linked to seasons and the drought periods, which cut the number of grass-fed fat cattle available.
At the same time, the buying percentage of feedlots has gone from 36 per cent of EYCI cattle 10 years ago to a dominating 47 per cent now.
Restocking activity, which is greatly influenced by rain and grass, has gone from just 30 per cent in 2010 to sit at higher levels of 38 per cent to 40 per cent in the past four years.
The rise in feedlot activity is the most notable trend, particularly when put together with the latest production data which shows cattle off-grain now account for a record chunk of Australia’s overall beef slaughter.
Meat and Livestock Australia market analyst Stuart Bull said when the number of cattle sold out of feedlots in the March quarter was tallied against overall kill numbers it showed grain-fed animals now accounted for a record 47 per cent of all slaughter.
“Recently released ABS slaughter figures are at 1.4 million head. According to the Australian Lot Feeders Association survey, 665,536 head were turned-off from feedlots – translating to 47 per cent of slaughter being grain-fed cattle, the highest proportion in 20 years,’’ he said.
The other set of data that is interesting is the raw figures of cattle sold from the major weekly prime markets monitored by the National Livestock Reporting Service.
This is a comparison of cattle sold to the different buying groups in 2010 versus 2020, noting it is a simple analysis that doesn’t take into account overall cattle supply from different periods, and the rise of online selling against auctions over this time.
But the figures still point to the same pattern of meat processors being less engaged in the physical auction system as feedlots and restockers become more active.
The figures were:
1,338,082 cattle (all types from cows to vealers) sold to processors in 2010, compared to 761,672 in 2020;
417,855 cattle sold to feedlots in 2010, compared to 542,847 last year; and
414,436 cattle sold to restockers in 2010, against 584,987 in 2020.
When the above data is viewed together it helps make sense of patterns being seen across the industry of feedlot demand being the biggest influence on southern cattle prices.
The latest example of the impact of feedlot activity is on grown steers, with some agents already suggesting it is going to distort the supply of grass-fed bullocks this coming spring and summer.
South Gippsland agents said with feedlots paying up to 450c/kg for grown steers in the 500-600kg range, producers were cashing in rather than carrying these animals through winter.
And financially it adds up when you consider the latest figures out of the Wagga Wagga prime market on Monday this week.
The NLRS said feedlots paid an average of 440c/kg or $2307 for 99 grown steers that weighed an average 524kg at Wagga Wagga. In comparison, processors paid an average of 388.6c/kg or $2574 for 62 bullocks that averaged 664kg. So for an extra 120kg farmers were paid $267 (difference between feeder to bullock return), which works out to just 222c/kg.
This sort of financial thinking is why southern markets are seeing waves of young spring-drop calves being sold at store markets for rates of 550c/kg to 650c/kg liveweight. Last week’s special spring-drop weaner sale at Yea averaged $1635 for 2122 steer calves sold.
The industry has changed, and continues to change, with the southern cattle industry becoming more of a breeding and store/feeder supply region.
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