Confidence on the rise and so is the money

Across the board, commercial buyers were spending up big, so big in fact, according to beef specialists, it lifted the average price paid by a commercial producer by $1500 to $2000 per bull. 

Angus was the largest volume breed at auction in 2016, selling 8405 bulls, about 40 per cent of all the bulls sold through the auction ring, averaging $7375, to a top-price of $85,000.  

This is a rise on the 8103 sold the previous year, and was achieved with a 22.5pc jump in the average price from $6023 in 2015.

Just 10 years ago, the 6784 Angus bulls sold at auction averaged just $3924.

Setting a benchmark for the industry when it comes to averages was Millah Murrah’s $16,348 average for a total clearance of 109 bulls. 

The Bathurst stud saw an improvement of  $1452 on the $14,896 record the same vendor set in 2015 and a new Australian record for bulls sold at auction for all breeds in Australia. The strength of the average price is an indication of the confidence in the beef industry and the genetic improvement that can be obtained from using recorded Angus genetics. 

But where is the line when it comes to the price commercial breeders will pay when competing with seedstock producers? 

Advisor Alastair Rayner, RaynerAg, Tamworth, says people are playing more for black bulls but need to be aware they are seeing a return on investment (ROI).  

“The average has risen by $1800 across the board through all breeds,” he said. “We have gone from paying $4700 to about $5600 for a bull. 

He said the issue for a commercial breeders paying more for a bull was determining where they were going to get that ROI, which bounced back in two ways.

“Number one is cost per calf produced. To make that investment worthwhile you actually have to have a lot more calves on the ground, so you have to factor in how much exposure is that bull going to get,” he said.

“If you have a 200-cow herd and you spend $10,000 on a new bull, but that bull might only get exposed to 50 of those cows because that is the size of his mating group, then if he gets all those calves on the ground then what is the cost per calf? You then would hope he would have a longer working life than the average, which is three years in southern Australia.”

He said the bull would have to have a four or five year working life or joined twice a year to get that ROI, which might be unfeasible.

“But it is also unrealistic to buy $2000 bulls. If you are still in that game you are never really going to get ahead.”