Southern Victoria cattle prices surge as market favours breeders

The opportunity for cattle traders to buy and sell at close to cents-a-kilogram price parity is swiftly leaving the industry as the market shifts to favour the breeding sector supplying store calves

The opportunity for cattle traders to buy and sell at close to cents-a-kilogram price parity is swiftly leaving the industry as the market shifts to favour the breeding sector supplying store calves.

The price floor for quality lines of young Angus steers sold at the major Mortlake and Ballarat store sales in southern Victoria last week was 500c/kg liveweight – a significant surge past the ruling liveweight money for feeder steers and heavy slaughter steers.

The peak of the market was over 600c/kg for light but well bred Angus steers, with 260kg calves making up to $1600 a head. The rapid rise in values would be welcomed by breeders coming off difficult years and poor seasons which have impacted profitability.

In January this year the average return for the blue ribbon runs of weaners sold at Hamilton was $1100 to $1370 a head to be arguably below the cost of production.

Now the pressure starts to shift to traders as their costs in the form of young replacement steers and heifers starts to increase. Lamb can also be put into this scenario, with the ability to buy cheap stores at money well below carcass returns for prime lambs off the cards as numbers tighten.

The graph on this page shows the trend line between heavy steers and online young cattle transactions.

It shows the buoyant times from 2021 until the spring of 2023 when buyer confidence and favourable seasonal conditions, mixed in with herd rebuilding and tighter cattle numbers, put an extreme price premium into the market for young store cattle.

At its peak there was a 200c/kg difference between the cost of a young steer purchased online compared to the ruling auction rate for heavy slaughter steers. The actual figures in early 2022 was 685c/kg liveweight for young steers transacted online compared to 455c/kg for heavy steers sold at prime markets, according to data from the National Livestock Reporting Service.

Then the market crashed in the spring of 2023, leaving cattle finishers holding expensive stores which were less finished to heavier weights than what they had paid for them.

Since then, influenced by high cattle numbers and patchy seasons and the hang-over of traders being ‘burnt’, the price difference between stores and finished cattle has been closely aligned. This has given traders the full benefit of weight gain and, at some points, even a bonus in a higher cents-a-kilogram sale price compared to buy-in cost.

That scenario is now shifting, and quite rapidly despite most southern grazing areas still only having a green winter tinge and no bulk of feed to speak of.

The figures in the graphic show the developing premiums between stores and finished steers, but don’t show the full story of what has happened in the past week. At Mortlake, Ballarat and Leongatha the best young Angus steers were averaging over 500c/kg. Price movements were not as dramatic online, and it has been the southern physical store markets which have shown the rapid gains.

And the trend is something to watch, as the shortage of cattle (and thus buyer appetite) is likely to be more southern focused compared to the north.

It was southern buyers from Gippsland through to the Western District and South East South Australia which created the much dearer price trends at Mortlake, Ballarat and Leongatha last week.

Some auctioneers did note the sudden shift from northern dominated buying power to more localised competition, one commenting how a major commission buyer had said how it now made more sense for his NSW and Queensland buyers to consider buying store calves closer to home due to added transport costs, etcetera.

A look at the difference in numbers and price for store cattle between Roma in Queensland and Mortlake last week is quite telling.

According to NLRS data there was 1145 yearling steers in the weight range of 200-280kg liveweight sold at the Roma store sale last week where nearly 10,000 cattle were yarded. The price range for these calves, described as C-muscle, so of reasonable shape and quality, was $900 to $1270 to average $1126 at an average cost of 438c/kg liveweight – a rise of 30c/kg on the previous Roma sale.

At Mortlake a run of 512 Angus yearling steers in the same weight bracket sold from $930 to $1555 and averaged $1311 at an average cost of 550c/kg – a rise of 155c/kg on the previous sale.

The points to focus on being the difference in supply and the price rise and overall price costs between the south and north, although acknowledging the Roma calves would have been mixed breed and wouldn’t have been straight Angus.

The calves sold in the south last week are probably not as “dear” as they appear on paper, as most have frame size and just lack condition so compensatory weight gains should be quite rapid on good feed.

And talking of feed, the movements in the southern store market have been achieved without the benefit of spring feed in paddocks.

Looking forward, many people believe the cattle market still has a lot of price improvement in it, which is feeding into this desire by some restockers to step in early and carry cattle before there is a bulk of feed ahead of them.