Feedlots plus tight supply pushes weaner prices up

Feedlots plus tight supply pushes weaner prices up

Beef
Elders auctioneer Aaron Malseed, Hamilton, Victoria, takes bids on this pen of Hereford steers, part of a yarding of 2309 all breed steer weaner sale at Hamiltlon today. PHOTO: Alistair Dowie

Elders auctioneer Aaron Malseed, Hamilton, Victoria, takes bids on this pen of Hereford steers, part of a yarding of 2309 all breed steer weaner sale at Hamiltlon today. PHOTO: Alistair Dowie

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Impact of bushfires on national herd will be significant

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THERE is little to suggest strong southern opening prices for young cattle will not hold, given the solid fundamentals behind the feedlot job, the fact there is still money in weaners for those who do have grass or dry feed and the tightening of supply exacerbated by disaster.

Better quality calves have made 320 cents a kilogram at the big Victorian weaner sales in the past week, which comes in at the top end of pre-Christmas analyst predictions.

In places like Wodonga, yardings were almost half advertised numbers with bushfires coming into play but it is also believed producers may have opted to hold back lighter calves on account of the late 2019 market drop.

Agents say cattle from some of those fire-affected areas are likely to be on offer later this week and next but as the losses start to filter in, it's becoming clear the impact of the bushfires on the national herd will be significant.

Cattle market analysts Mecardo say it could amount to another 1.8 per cent taken off the national cattle population.

That comes at a time when numbers have already been decimated by drought. All analysts agree tight supply will be a key driving force behind the cattle market throughout 2020, whether or not the drought breaks.

Wodonga livestock agent Michael Unthank believes this week's weaner prices will look cheap in a few months.

Supply is running out, he said.

Restockers might be out but the feedlot demand is going to continue and when slaughter catches up with the Christmas rush, the buying competition will be hot.

"The bones of it all are solid," he said.

"Rain or no rain, the numbers on offer will be less and less."

Weaner weights so far have been heavier than typical, with stock drawn from southern areas that have been blessed with a relatively good season. Lotfeeders from as far up as northern NSW were keen to secure good numbers of the heavier cattle.

Cattle-on-feed numbers have been sustained in excess of one million head for six consecutive quarters now.

Meat & Livestock Australia figures show feeder buyers of EYCI-eligible cattle were trading at an average premium of 53c to restockers at the end of last year.

Lighter calves at this week's Victorian sales were picked up mostly by local producers with feed on hand.

Mecardo's Angus Brown said the southern weaners were selling at a premium to the Eastern Young Cattle Indicator which closed 2019 under 300c liveweight.

There was still value in the trade. Gross margins on buying weaners and growing out to feeders or heavy steers remain very good for those who can access cheap feed, he said. Even at the lower end of the expected price scale, reasonable profits should be made.

Beef consultants say their advice remains "if you can hang onto cattle there is only upside" but they add the caveat that was also the advice this time last year. The extent of the drought brought some who tried to hang on too long undone.

While few analysts are keen to say too much about how the cattle market will go in the next month or so given the many unknowns, including the extent of the impact from bushfires, most agreed that strong feeders and finished prices are likely to continue but females and store cattle will struggle until rain arrives.

SEE ALSO: Livestock losses from Vic fires climb

Wodonga weaners sell to $1360

The story Feedlots plus tight supply pushes weaner prices up first appeared on Farm Online.

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