MOMENTUM in supply appears to be the fundamental reason behind some softening in Wagyu feeder prices – both F1s and purebreds – over the past six weeks.

Anecdotally, there’s evidence of some feedlots refilling a few pens that previously housed Wagyu with Angus and other feeders, partly because of the tough nature of the Wagyu export meat market at present.

Beef Central’s previous Wagyu feeder price report published in early September quoted well-bred F1 feeders out of good Angus dams worth anywhere from 450-500c/kg liveweight, with prices around 480c the most popular landing-point.

However availability has expanded significantly since then, with quotes from large Wagyu supply chains in recent days suggesting typical F1s were late last week making 450-470c, for delivery through to March next year. Some F1 quotes this week ranged from a low point of 420c to an upper level of 480c, making it difficult to provide an exact price point.

One operator said some price signals seen five or six weeks ago were perhaps a little inflated, being driven by ‘just a couple’ of large Queensland F1 supply chains that had offers above the rest of the market, perhaps due to inventory management issues.

“Vendor expectation then means the rest of us (Wagyu supply chains) got bashed-up for a few weeks, when that was not really the true market level,” he said. “Ten percent of the F1 cattle being sold that week may have in fact made a price around 500c, but the vendors of the remaining 90pc were unhappy, because it wasn’t really where the market was at.”

Selling interest grows

“There’s certainly a lot of F1s floating around this week – we’ve received calls from people we have never heard from before,” one large supply chain manager said on Friday.

“We’re getting offered a hell of a lot more F1 cattle than this time last year. Some of those inquiries are from first-time F1 breeders, while others had been part of another Wagyu supply chain, but were shopping around.”

Perhaps partly explaining that, there’s also some clear evidence in the market at present that some large grainfed supply chains are reducing Wagyu numbers on feed, replacing them with somewhat shorter-fed Angus, with a much shorter exit horizon. In one case, a large commercial yard that previously had 45pc of its inventory being Wagyu cattle is now back to 30pc.

One contact said that trend was being replicated in at least some other businesses, as profitability in Wagyu continues to struggle.

“A few Wagyu supply chains have been burnt this year, and are retracting their programs somewhat to more sensible numbers. In reality, nobody knows where Wagyu beef demand will be this time next year, when F1s going into pens now are ready to be turned out,” he said.

“I don’t think there’s too many idle pens around as a pen of Wagyu closes-out. It’s just that some of them are being re-filled with cattle other than Wagyu, until the meat side of the equation shows some improvement.”

“There’s a couple of reasons for this: uncertainty about demand and price prospects for Wagyu, given the extremely long production horizon, and secondly, the capital required to hold Wagyu stock on feed so long. You could feed two or three pens of Angus at present, instead of one pen of Wagyu, with quicker turnover,” he said.

“Underpinning that, the Wagyu meat market in most parts of the world is still really, really bad. The China market is very flat, due to the local economic conditions, and Wagyu beef at food service there is very poor. Japanese and Korean markets also lack any real vigour for high quality meat at present.”

While tonnage of Australian beef into China has remained reasonably sound this year, prices for many Chinese imported beef descriptions are now near four year lows when measured in US$ terms, recent reports from China’s Meat Import Group have suggested.

Wagyu following broader feeder trend

If anything, Wagyu feeders have pretty much followed the broader trend in all feeder prices over the past six weeks, he said. Current Wagyu feeders are probably as cheap as they have been since the collapse towards the end of last year, which was driven in part by a lack of confidence in the seasonal outlook, courtesy of BOM’s wayward forecasts. Based on that pessimism, this time last year, Wagyu feeders got ‘really messy,’ falling into the high threes for a period, before slowly recovering after rain fell early this year.

Historically, November through to January-February tends to be the strongest supply period for Wagyu F1 feeders, out of southern states. Based on current supply, Australian Wagyu F1 feeder prices could continue to decline through the end of the year, one supply chain manager said.

Higher content feeders

Distinct from the F1 feeder market, higher content Wagyu feeder cattle are also showing a significant softening trend in price this month. Purebreds (F4 and higher) that were making 630-640c/kg only six weeks ago are now being transacted in some cases at 580c/kg, with buyers seeking to ‘move that price further’ to reflect current meat price conditions.

Mid to high fives was a quote offered by another purebred program manager on Friday, while another suggested desirable purebreds types still as high as 640c/kg.

In percentage terms, the recent declines on purebred feeders (F4 and better) may be similar to F1s (and even flatback feeders), but in c/kg terms, reductions have been much larger, at around 50c/kg.

China languishes

One supply chain manager suggested that movement in purebred feeder prices was directly linked to the poor state of the Chinese economy.

“It’s that purebred segment where the Chinese demand for that higher level product was – part of the country’s prestige/ego culture around elite food,” he said.

To add to current market challenges, Japanese-produced Wagyu beef is also being exported in increasing volumes into world markets at quite cheap prices, boosted by currency weakness.

Feedgrain impact

Easing feedgrain prices are now starting to filter through to larger commercial lotfeeders, even among those with forward purchased grain to eat their way through. One Downs feedyard offering custom feeding services has reduced its ration cost to clients by $30-$40/t on the back of recent lower grain, and told Beef Central a further fall was likely before the end of the year.

That benefit will also start to filter through to Wagyu programs, but length of time on feed means grain price reductions seen over the past month or so will not be seen until the back end of 2025, for cattle than have only recently entered programs.