Wagyu feeders hot property

Exacerbated by overall tight cattle supply, feeders with Wagyu content are extremely rare and that has pushed prices to unprecedented levels, with some producers reporting having been offered up to $7 a kilogram liveweight for well-bred fullblood steers.

The going rate on AuctionsPlus has been $6.60 cents per kilogram for lightweight weaned F1 Wagyu steers.

A single offering of F1 steers last week from central NSW made 661c or $2260, and heifers from Glen Innes, weighing 269kg, sold for 619c or $1662.

That is a huge jump on the Eastern State’s feeder average, as reported by National Livestock Reporting Service, which is currently sitting around 354c/kg lwt for lightweight steers and 339c/kg for heifers.

Chief executive officer of the Australian Wagyu Association Graham Truscott said demand was far exceeding supply.

“Where Wagyu cross feeder steers were commanding a 50 per cent premium over Angus last year, they are now attracting a 70pc premium,” he said.

“Feedlotters are willing to pay even more for straight Wagyu but only 20pc of available supply is fullblood.

“Feedlots also appear willing to accept Wagyu F1s at any weight just to secure them, where as with other breeds, higher weights are still demanded.

“The degree of profitability in producing Wagyu feeder steers is one of the brightest stories in agriculture at the moment.”

Geoff Willett, from Maydan Feedlot in South East Queensland, which feeds for Wagyu customers around Australia, said Wagyu-cross were in short supply at a time when demand was huge.

“There’s no doubt our customers are finding it difficult to source the supply they need,” he said.

Wagyu brand owners say not only have new players joined or re-entered the market but existing businesses are ramping up production.

Some say recouping the high costs of cattle at the other end is already proving difficult, with juggling sales mixes and currencies and explaining supply chain dynamics to customers now a daily challenge.

One prominent operator said there were grave concerns the industry was about to enter a dark period, given how much the market for Wagyu feeder cattle had moved.

However, most in the business would view Wagyu as a long-term investment, he said.

Others feedlot operators said the value of the end product was increasing on the back of strong and growing world demand for Wagyu and the market was far from saturated.

That was underpinning the value of the carcase and there was still room for upward movement, according to one operation.

One of the country’s largest Wagyu beef wholesalers Osawa Enterprises said sourcing supply had become very tough.

Kimio Osawa said the situation had become acute in the past three to four months, when supply had at least halved and prices jumped more than 50 per cent as a result.

Osawa supplies high-end Australian and Japanese restaurants with Wagyu boxed beef under ten brands.

“I’ve been in this business for 16 years and never had this big a problem,’ Mr Osawa said.

Demand was such that Osawa could double the three to four tonnes a week it sold if supply were available, he said.

Mr Osawa said he could not see the situation easing anytime soon.

His suppliers were ramping up production but that was expected to take at least two years to come into effect.

In the meantime, some customers were starting to switch to black Angus, he said.

Mr Truscott said the premiums were fuelling a major drive towards Wagyu content in herds.

The breed expected to comprise five per cent of the genetic base of the Australian national beef herd in ten years - currently it sits at 1 to 2pc.

Forecast growth meant 22,000 bulls would be required by 2020, or 4400 per year, all with good estimated breeding values and indexes to predict performance.

But there was a warning to new entry F1 Wagyu breeders to ‘exercise caution’ when buying bulls given how few were available, Mr Truscott said.

The association has guidelines for new entrants on its website.