Finding a 'bid type' premium online

Finding a 'bid type' premium online

Beef
Charolais/Angus weaned steers, 282kg offered c/kg and $/head returned $1110/390c/kg. Vendor was DA and JRA Witten Partnership and assessor was Dannie Wilkie, Objective Livestock Marketing.

Charolais/Angus weaned steers, 282kg offered c/kg and $/head returned $1110/390c/kg. Vendor was DA and JRA Witten Partnership and assessor was Dannie Wilkie, Objective Livestock Marketing.

Aa

Is it better to offer cattle on AuctionsPlus via dollars a head, cents a kilogram, or both?

Aa

IN PREVIOUS research, the AuctionsPlus Market Insights Team found that the online market for young cattle was consistently above the Eastern Young Cattle Indicator in terms of price during July 2018 to March 2019.

However, what other factors also influenced a premium when selling cattle online?

The AMI Team recently completed a comparison of the price outcomes of offering young steers by bid type, ranging from dollars a head, cents a kilogram, or both.

For steers weighing more than 250 kilograms, sold through AuctionsPlus throughout 2018 from NSW, Victoria and South Australia, 86 per cent of steers were offered as $/head only, while 9pc were offered as both $/head and c/kg, and just 5pc were offered c/kg only.

When comparing the average c/kg liveweight price received in each of the bid types, it was found that steers offered with both $/head and c/kg bidding available achieved a price premium over those offered only in $/head - averaging 15c/kg higher.

Those offered in c/kg also sold significantly better than those offered solely as $/head, achieving an 11c/kg premium.

There was no significant price advantage found when offering steers c/kg compared to $/head and c/kg.

When also considering the average weigh variation between each of the offerings, namely the lighter weights in those steers offered as $/head, it could also be assumed that the true premium of offering $/head and c/kg or c/kg could be even greater.

On a 300kg animal, the 15c/kg premium gained by adding c/kg bidding would equate to an additional $45 per animal.

A major advantage of selling online is the ability to select how you wish to sell your animals, however this price premium strongly indicates that buyers are also willing to pay more for this flexibility.

When speaking to a major south-east Queensland feedlot buyer, they expressed that they "always prefer to buy c/kg over $/head". The buyer added with "c/kg you get what you pay for".

The buyer also expressed that the availability of c/kg bidding on lots gave them more confidence when buying.

While some buyers, particularly restockers, may still prefer to purchase on a $/head basis, the ability to offer lots both ways provides the advantage of appealing to all buyers.

On a 300kg animal, the 15c/kg premium gained by adding c/kg bidding would equate to an additional $45 per animal.

Considering this, the gain on just one steer would cover majority of the cost of weighing your cattle at most locations.

Aa

From the front page

Sponsored by