Grainfed profitability heads North

Jon Condon, 02/06/2011


The sums on feeding 100-day grainfed cattle have swung back towards positive territory, but still have some way to go to turn a net profit.

An analysis based on yesterday’s spot market for inputs suggested a breakeven figure of 385c/kg dressed weight for 100-day grainfed steers ex-Darling Downs, going on feed today and closing-out during week-two in September. That’s down 1c on a similar analysis done a fortnight ago.

The biggest change in variables has been in the over-the-hooks forward market price for mid-September, which has drifted up to the high 370s with competitive export processors, from low 370s two weeks ago.

The forward sale price rise means today’s proposition is 6-7c/kg dressed weight below breakeven, worth about negative $25 a head. That’s considerably better than 15-16c deficit seen a fortnight ago (worth -$53/head), but still in the red.

The calculation is based on assumptions including a 356kg dressed weight, feeder steer purchase price of 190c/kg liveweight, and finished ration price of $270/t (both virtually unchanged from a fortnight ago).

Total cost calculated was $1362, including feeder steer purchase plus typical feeding program. The breakeven figure factors in a 1pc mortality rate, but even removing that component only brings the breakeven figure back to 381c/kg.

Similar calculations made pre-Easter, produced a 100-day profit result very close to breakeven. The big change since then has been in lower finished cattle prices. While grassfed steers have borne the brunt of the 40c/kg liveweight declines in price since pre-Easter, 100-day cattle have also dropped 25-30c/kg over the same period.

Looking back at this same week last year, breakeven was about 10c/kg less than what it is today. But at the same time, meatworks forward rates in early September last year were around 365c/kg, giving a result of negative $40. That’s based on an identical feeder price of 190c and ration price of $240/t.

One Downs grainfed industry stakeholder said meatworks forward rates for 100-day cattle would need to head closer to 400c/kg to attract cattle producers to commit some cattle in custom-feedyards.

“It’s really only cattle destined for established meat contracts at the moment, but it’s improving,” he said.   

Today’s Eastern Young Cattle Indicator closed at 387.5c, down 8.75c on a week ago. The NLRS medium steer indicator was back 6c on last week to 183.6c liveweight, while the feeder steer indicator was down 10c for the week to 200.8c.

  • Beef Central publishes a fortnightly 100-day grainfed breakeven calculation based on a standard set of variables, ex Darling Downs. A southern, British-based domestic-fed scenario will be added soon.


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