Special report: The rates livestock producers will be paid in spring
Spring livestock prices will determine the fortunes of many producers and in a special report, 10 leading analysts take a punt on how the market will track.
Spring is a traditional peak time for livestock turn-off across south-eastern Australia, but tough seasonal conditions in key production areas could play havoc with cattle and lamb supplies. The Weekly Times spoke to key industry analysts and stock agents to get their take on what might happen to rates over the next few months, how supplies might be impacted by poor feed supplies, and what might happen to demand as producers face the coming spring with mixed feelings after low returns a year ago.
Chris Howie, RMA Network chief executive officer
A price divide will emerge in southern Australia this spring as the gap between unfinished stock and prime animals determines value, according to RMA chief executive officer Chris Howie. He said trying seasonal conditions had already seen calves weaned at 170-220kg liveweight, while some producers were looking to send cattle into NSW to retain breeder numbers.
“There will be a hole in the south for four to six weeks for both cattle and lambs that have quality,” Mr Howie said.
The shortage of heavy lambs will see no big runs come into the market until at least mid-September, and the flow of stock from traditional production areas in South Australia would be very late, he said.
“The saving grace is that there are processors who have brought forward prices of up to 800c/kg (carcass weight) for lambs, and also there are good seasonal conditions in some areas of eastern Australia,” Mr Howie said.
Terry Ginnane, Nutrien South Gippsland Livestock director, Leongatha
Spring, and how much rain falls, will determine how cattle prices will track according to Terry Ginnane, director of South Gippsland Livestock. Gippsland has had quite a good season, he said, and if rain comes within the next couple of weeks, there will be plenty of grass and prices will hold.
Prime cattle prices were good, he said, and the big appetite for cows to supply the 90CL grinding beef market meant plenty had been coming forward, but yardings could ease off through spring.
Feedlots continue to be the dominant force for heavier cattle and this could continue with 400kg and heavier lines mostly selling to be grain fed, though some producer bidding was winning at times.
“There’s still time for it to rain, and if it does, we will see a different outcome in cattle markets than if it doesn’t,” Mr Ginnane said.
Olivia Agar, Mecardo business insights lead
Strong global demand for beef, particularly coming from the United States, will continue to incentivise processors to maintain kill rates in spring and keep prime markets solid, according to Mecardo’s Olivia Agar. “What this means is that slaughter cattle from the south will be keenly sought in October and November as many medium weight cattle have been sold already,” Ms Agar said.
She said producers should have confidence in the positive market outlook this season when buying store cattle. “On the back of stronger feeder demand in the late winter period we expect that these favourable market conditions will continue, and store cattle prices remain buoyant from October to December,” Ms Agar said.
When it comes to lamb, she said it was “really encouraging” to see finished lamb values sitting at about 10 per cent above five-year average levels since July. “The 10-year average trend is for trade lamb prices to fall about 7 per cent from here until December rolls around and we know demand out of the United States and the Middle East is strong, so there could be a substantial premium for well-finished trade stock late in the spring if the season inhibits producers in the south from finishing lambs,” she said.
But when it comes to store sheep and lambs, it’s all about the season. Dry conditions in the more southern states could see new season lambs hit the market later than usual, or held over, she said, but with good spring rainfall, restockers could be encouraged to set back in and start buying.
Pat Cleary, Elders Cleary McDowall, Moss Vale, NSW
In NSW, it’s a different landscape as many areas enjoy a good season and plenty of feed. Elders Cleary McDowall director Pat Cleary said above average rain from March onwards had created a big bank of feed on a line north of Forbes and Moss Vale, NSW, stretching as far north as Wandoan, in Queensland. Mr Cleary said good numbers of prime cattle would be available but many had already been committed to processors.
“There is a lot of feed in the north and they should be able to handle numbers,” Mr Cleary said.
“The domestic seasonal conditions will set the tone for both the prime and store markets.
“The best thing is that its not universally awful across all of eastern Australia as it sometimes is.”
He said online sales had seen strong results, and while they were “not the $3500 for breeders” that had been seen in the past, there were plenty of steers making 430-450c/kg (liveweight).
Paul Holm, Auctionsplus general manager – network
The fundamentals of the cattle industry are very good according to Auctionsplus general manager network Paul Holm, who looks to the world protein market for pointers. He said international influences, even the upcoming United States election, could have just as much impact on what producers were paid this spring as the season. An 81 per cent clearance at the latest Auctionplus yearling and weaner sale meant this sentiment was echoed by many beef producers.
He also looks to the bigger picture when it comes to lambs, and feels the market will hold on despite worries about a surge of unfinished lines coming on to the market. “What the lamb industry has in its favour is that the processing capacity is now so high,” Mr Holm said. “The big issue, though, is that there are no long term contracts out now that encourage producers to buy lambs and feed them, knowing what they will get.”
James Haddrick, HF Richardson, Ballarat
Optimism is balanced by seasonal fears and how prices will play out for lamb producers this spring. HF Richardson agent James Haddrick from Ballarat said confidence came from some contracts out for 800c/kg carcass weight for lambs into November, but whether producers will be able to supply lambs at weight at that time was the question.
“If we don’t get good rain in the next two to three weeks, then producers might decide not to feed and bite the bullet and sell store lambs, whatever their weights,” Mr Haddrick said. Those that decide to shear and sell lambs later could force big numbers onto the market next autumn. But he said there was a large percentage of producers who had either been burnt (financially) by keeping lambs on in past seasons, or simply did not want to go through the hassle of shearing. This could see numbers of unfinished store come onto the market in spring.
But with numbers come opportunities for those prepared to take a chance, Mr Haddrick said, including fattening mutton sheep. But again, there were fewer prepared to take the risk, and wool length was an issue. “It used to be that people would buy sheep with a couple of inches wool and shear them, fatten them, and put them in the market again but these days, wool is seen as a hindrance,” he said.
Katie Lewis, Corcoran Parker and Auctionsplus highest national cattle throughput 2023/2024
As a self-confessed glass half full person, Katie Lewis from Corcoran Parker at Wodonga said there were markets for store stock even if the season locally was not great. Ms Lewis said quality would continue to determine prices, even it was for store stock that were suffering under the tough season.
She said prime cattle markets should continue to get stronger, and was encouraged by the high kill numbers already this year. “We have got through the bottle neck of numbers last year and I feel like prices will stay positive for some time,” Ms Lewis said. “The low feed grain prices also work in our favour (cattle producers) as it makes feeding cattle more affordable for feedlots.”
She said livestock producers were resilient, shown by the way they had coped with the big swings over the past two years. “I don’t think anyone on Wall Street (stock exchange) would have been able to deal with what our producers have over the past couple of years with the way prices have moved so dramatically,” Ms Lewis said.
Tom Dennis, Elders Naracoorte livestock manager, SA
The season has turned the corner and so, too, have cattle prices according to Elders Naracoorte, SA, livestock manager Tom Dennis. The flow of stock from south-east South Australia will be about four weeks behind normal, but late winter rain has dragged the area out of its tough time. Feeder cattle with weight will be in short demand, and looking forward to the weaner sales in December, cattle will be lighter there too. “Our historical average has not varied more than 20kg (liveweight) from year to year and last year, our weaners averaged 370kg liveweight,” Mr Dennis said. “This year, we expect them to average 320kg.” But prices are looking much more positive for cattle, he said, for everything from weaners to old cows, which had been cashed in at good values. “The market is coming back to where it should be when you consider the costs of production and input costs,” he said.
Peter Cabot, Australian Livestock and Property Agents Association president and Nutrien Wagga Wagga livestock manager
What happens with prices for both sheep and cattle will depend on the season, a sentiment shared by most others. “There’s been good rain in the north (NSW) but it has been tough enough in the Riverina with no autumn break and a cold, ordinary winter,” Mr Cabot said.
Recent rain will mean lambs will catch up despite the slower than expected start and should come into markets like Wagga Wagga, NSW, in a reasonably traditional pattern. The unknown, Mr Cabot said, for the lamb industry was how the flow of lambs from the major production centre of the Western District wold impact sales, given they could be big in number and quality would be determined by the hard season in that region.
For cattle, Mr Cabot maintained the best time to achieve high prices was in August and September. “In a normal year, we see a bit of price pressure for cattle in October and those that have sold feeder cattle in August and September in the past end to have done better than selling later,” he said.
Ron Rutledge, Nutrien livestock operations southern Australia
Confidence or lack thereof, is what could drive buying and selling decisions for livestock producers over the next few months according to Nutrien’s Ron Rutledge. The season has forced some producers to sell early, and that covers both cattle and sheep. “It’s a feed equity problem,” Mr Rutledge said. “Producers are trying not to carry any more stock because they have no hay and no ability to lock up paddocks to grow hay.”
Whether to sell or not would also be dictated by cash flow. And if producers are on the buying side of the equation, Mr Rutledge said it was a “fantastic opportunity”. “You would think that store values, especially for sheep, will be determined by their comparative slaughter value,” he said. “In the store sheep sales in the Riverina, you will see the noted few lines continue to make a premium, but for the rest, it could be based around slaughter rates.”
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