Heifer prices: Livestock uncertainty in 2023 has safety agents talking

The herd “rebuild” may be over, but uncertainty entering 2023 has helped inflate weaner heifer prices.

The herd ‘rebuild’ may be over, but uncertainty about cattle prices into 2023 and beyond could help support weaner heifer prices as restockers look for the trading safety of a young female.

Prices for heifer weaners came close to matching steer averages at the second leg of the Euroa Black Friday sales series last week.

Elders agents selling at the Euroa cattle sale earlier this month.

The top heifer price of $2190 for Angus weighing 380kg exceeded the best steer money of $2040 paid a week earlier. So did the second best sale at $2100 for heifers weighing 360kg.

Selling agents said the majority of the heifer weaners sold between $1600 to $2000 with vendor averages often close to their steer income despite most breeders keeping their top heifer calves at home as replacements.

The quoted range was 550c to 650c/kg with some of the lighter heifers selling strongly in a repeat of the dollar per head buying trend seen for steers. There was 255kg heifers that made up to $1600.

A Lawsons Angus cow and calf at Yea.

“The weaner heifers often made as much as the steers, and there was cases where breeders did receive more for their heifer portion,’’ Rodwells Euroa agent Mick Curtis said.

“It was a bit dearer than what we thought it would be, and I think that with a lot of feed around people could go for the safety of a heifer and the trend (of heifers outselling steers) could continue into the new year.’’

By ‘safety’, agents are referring to the back-up option of growing-out a heifer for breeding if the beef market turns drastically sour in 2023.

It comes as market analyst Tim McRae, AuctionsPlus, believes the industry reference to ‘herd rebuilding’ needs to shift to ‘herd expansion’.

It is based around numbers. Mr McRae said by June next year Australia is estimated to be home to 27.5 to 28 million cattle.

“This exceeds the average annual cattle population since 1990 which is approximately 26.5 million head,’’ he said.

“Thus, any growth beyond 2023 should be referred to as an expansion not rebuild.’’

With the bigger supply pool of cattle will come downward pressure on price. Mr McRae has released his prediction for next year and has come up with a ballpark figure of the Eastern Young Cattle Indicator being at 750c/kg carcass weight this time next year.

To put in context, at the moment the Eastern Young Cattle Indicator is sitting at 900c/kg cwt, so he is factoring in a decline of around 15 per cent.

It is an educated guess and there are always wildcards at play.

Industry generally accepts that the key drivers for the beef market into next year and beyond broadly fall into four categories – the season, the economy and consumer spending, the United States market and the Chinese market. And obviously there is some blending of all these drivers.

For example, if the extended drought in the US breaks next year, it paints the scenario of less cattle being slaughtered in America, meaning less of their beef on the global stage and potentially more demand for manufacturing beef as its cow slaughter reduces dramatically.

The issue is that if the northern hemisphere is enjoying good rainfall and seasonal conditions, the reverse is often true in the southern hemisphere. Hence the current situation of Australia coming out of a run of three boom wet years, and most of the US enduring one of its driest runs in living memory.

Obviously some of the impact of a US cattle price rally would be diluted if Australia stepped back into drought settings with its much higher herd numbers.

Then there is China and its appetite, and financial ability, to keep buying bigger and bigger volumes of beef. In 2022, it bought 2.332 million metric tonnes of beef. This year it is expected to break 2.4 million tonnes when final import figures are tallied.

But with China still facing extensive problems from Covid-19 and a slowing economy, questions are being asked about its ability to keep expanding its beef import tally in 2023.

Globally, the overriding issue for red meat is consumer spending and the competitiveness of beef against cheaper meat options such as chicken and pork.