No cliff in sight but beef buyers still get the jitters

How long will frantic bidding in the saleyards continue?

Opinion
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The Land has its say on how long will frantic bidding on beef prices in the saleyards continue.

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Back in the day, we're talking 15 years ago, when a cocky purchased weaners at annual sales, you could get a good price for cattle weighing 280 kilograms to 350kg.

There was the expectation that there would be a reasonable return and in one of those years backgrounders would double their money putting weight on those calves, taking them to 450kg plus for feedlot entry.

They were able to do that through a combination of a good season, irrigation water available to grow pasture in the autumn, and they knew what entry prices for feedlots were going to be.

Two years later that came unstuck and the pain experienced by many was awful.

Drought, no water allocation to grow pasture and rising store stock prices saw the same cocky get back equal to or less than what he paid for them - he didn't return a profit.

Fast forward to today and this could very well happen again, but will it?

Consumer demand is powerfully strong in the wake of a pandemic, many keen to splash out on better tucker while most of the globe wallows in a protein shortage.

Is this a bit like the two stroke motor that revs high just before it runs out of fuel? Industry leaders say no.

Even if all replacement heifers are joined in the spring, it will be 2024 before milk tooth progeny enter a feedlot and it is this lingering gap in supply that lends confidence to those in the know, like RLX general manager of operations Cye Travers or industry analyst Simon Quilty, who are confident in saying it will be three years before prices subside.

Of course, processors are banking on a shorter window and point to a correction in 2022 - hopeful that money can be made at the final cut rather than boxing grinding beef at a loss, hoping to keep their brand and market reputation afloat.

Meanwhile, commission buyers are returning to saleyards armed with the knowledge that buyers can afford to pay 480-500c/kg for calves entering feedlots and in this brave new world the producer is the one to benefit.

"It takes years to recover from drought," say those who've lived through this before, but who is to say if profit in breeding livestock will be there when all the paddocks have filled up - maybe that cocky still smarting from the pain of price fall in the past will be correct.

Until that time, chin up and keep producing!

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