Phenomenal bids on fat steers during Sunday's Beef 2021 commercial cattle championships have no bearing on reality, says one processor who likes to compare the cost of boxed beef with potential in the paddock. He can see the problem but apparently backgrounders are blind to the fact as they have helped maintain fully firm prices for prime cattle in all the yards this week.
A lot of the weaner cattle have been sold and there's plenty of feed so numbers are back
Timely rain in the farming districts will benefit those who sowed dry while oats for feed will require more mouths to take advantage of any riches so the restocker pressure continues while feedlots continue to source throughput for July, historically a lean time of year for suitable calves.
It is beginning to look like all those predictions about prices remaining steady until spring time are ringing true.
Certainly there was money to be made at Gracemere, near Rockhampton for those 18 month old steers - a cross of Charolais, Hereford and Shorthorn, that were hormone treated and fed for 100 days at Lillyvale Feedlot, Condamine.
The winning pen weighed 696.5kg and brought 423c/kg or $2942 a head, going to Teys Australia, which also took part in the judging.
It is tempting to think such a prime price paid by a processor might signal a sound future, where feedlotters can continue to buy-in at more than $2000 and restockers will continue to pluck weaned calves for $1300 to place on paddocks.
Kyogle processor David Scarrabelotti, Greenmountain Trading, disagrees saying the celebration of riches being harvested at the backgrounding end have no bearing on reality at the other.
"It is obscene what they are buying. It is a disrespect for money," said Mr Scarrabelotti. "What restockers are paying is not in line with anything going on in the export market."
By Mr Scarrabelotti's calculations those champion steers would have dressed at 58 per cent while restocker steers at half the weight might dress at 52pc with the result that the boxed beef has something like 35pc less value per kilo than restockers returning to the paddock.
"The market (based on the Australian 90CL imported manufacturing beef price into the US) is $2/kg cheaper than it was in October 2019 and Australia must export half its production.
"How anyone can make a quid like that is beyond me," he says. "Whenever a market is created by those who supply the market it is dangerous. There will be tears."
"The idea that there is no cattle around is a Furphy. In the last 12 months there have been 4 million less cattle killed and most of them would have been females. It won't take long before we have numbers again."
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