Restocker price squeeze

It’s the catch that comes with any dry period – whether to destock or feed cattle – but agents have warned those already destocked, or are thinking about it, may not be able to compete with the prices feedlots and processors are prepared to pay to fill contracts.

In fact, even without rain the market is about to “explode”, according to Bob Jamieson Agencies director Bob Jamieson, Inverell, who claims there’s enough demand from both domestic and export contracts for cattle prices to head sky high.

Just a few falls of rain in the past fortnight have ramped up the market and Mr Jamieson confirmed restockers wouldn’t be able to afford cattle once the season really starts to improve.

He said a good example last week was on AuctionsPlus where 100 heifers from one of his clients with an average weight of 339 kilograms which had a reserve of 180 cents a kilogram.

“The Angus/Brangus heifers sold for 212c/kg (returning $719) and restockers were outbid for them,” he said.

He said it demonstrated just how strong the demand from feedlots and processors was, even without significant widespread rain.

In that same lot, 100 Angus/Brangus steers from 10 to 12 months weighing 387kg sold for 223c/kg ($867), which was about 30c/kg above the reserve.

“We are already seeing new feedlot contracts for 100-day bullocks that are 30c/kg to 40c/kg higher than I’ve seen for a very long time,” he said.

While the market was not at record levels just yet, Mr Jamieson said it was only a matter of time before those contracts could hit record rates.

As a result, he said his team had been advising their clients to hold on to breeding stock for as long as they could.

“It’s hard because I think people get tired of being told to keep holding on and yet the market doesn’t turn because it’s still not rained,” he said.

“But I think we are heading into a really exciting time for the cattle industry.”

At the close of markets on Tuesday the Eastern Young Cattle Indicator had climbed to 355.25c/kg (carcase weight) which was 4.25c/kg higher than at the same time last week.

The prices for young prime stock had already risen about 15c/kg in the past month.

National Livestock Reporting Service figures show on Tuesday the biggest lifts in the market were for vealer steers, which were nearly 38c/kg dearer than a week ago across the eastern States.

Overall the price lifts at markets in NSW were also on the back of increased yardings.

Meat and Livestock Australia market information and analysis manager Tim McRae said the cattle indicators were likely to continue creeping higher during the coming fortnight.

“But thereafter it will depend on any follow-up falls, especially across northern NSW,” he said.

“While the beginning of spring traditionally marks the beginning of the seasonal decline in prices, this is less likely to be the case this year, if further rain eventuates as numbers will remain contracted.”

Overall for spring Mr McRae said he expected to see tighter supplies compared with last year, given the lower supply base the industry would be drawing from.

“Additionally, feed and water conditions in southern NSW and into Victoria are far better going into spring this year than they were a year ago, helping to provide buoyancy to the market, and limit throughput,” he said.

AuctionsPlus market operations officer Anna Adams said history had shown a rainfall event more often than not caused an increase in numbers offered on AuctionsPlus.

“While there were some offering cattle on the anticipation of a market upturn, the severity of conditions in the past two years have left most people more inclined to hold onto their stock with a glimmer of hope for a good spring,” she said.

She said there were plenty of feeder weight steers available last week with strong competition from lotfeeders and for finishing on grass, and very few were passed in.

WIDESPREAD follow-up rain across the North Coast is providing additional grazings for winter-planted feed, has set up paddocks for summer crops and pastures, and has fuelled an upward trend in the cattle market.

Inland areas of the region, like Casino and west of Grafton, received up to 60 millimetres at the weekend, taking totals for the fortnight to close to 100mm.

Closer to the coast, total falls have pushed the 200mm mark.

Norco agronomist Angus Legoe, Casino, said there had been a slightly above-average planting of ryegrass and oats on beef properties this winter to fill the gap from poor feed growth in the summer.

“This rain has been fantastic for those pastures and will mean at least one additional grazing, likely two,” he said.

“Temperatures need to rise a bit more before we see benefits to summer perennials but it is an excellent start to the season.”

For Kyogle district beef producers Grant and Jo Bulmer, the 75mm-plus that has fallen on their June-planted oats at Cedar Point in the past fortnight has made the decision to carry weaners through winter pay off.

The couple, who run a 500-head Brahman-cross herd, held on to 300 weaners that would normally be sold in autumn and take them through to yearlings.

They planted 32 hectares of oats on several of their properties near Kyogle and Coraki.

Mr Bulmer said he’d never seen such good August rain and while it was a huge boost to the oats, the native pastures would probably benefit even more.

– SHAN GOODWIN