TYPICAL flatback feeder steers entering a shortfed program this week and closing in early October would deliver a modest $10 profit, Beef Central’s latest 100-day grainfed trading budget calculation suggests.

Better-performing cattle producing higher average daily gains of 2.2kg would fare a little better than that, returning a profit of $90, the latest calculation shows.

Both results are a little better than our previous budget calculated back in November, but significantly stronger than a budget this time last year when a $71 a head loss was recorded on average performers, with higher performance cattle closer to break-even.

Our latest grainfed trading budget calculated this morning, using a standard set of variables since 2011 (see description at base of page) is based on purchasing a heavy flatback feeder steer going on feed this week for custom-feeding, and closing-out in October week one after 105 days on feed in a typical Downs feedyard.

Feeder price

For today’s budget, we have applied a heavy flatback feeder price (ex Downs) of 375c/kg.

Trading is happening this week in the 375-380c range, with location a factor, but prices at Roma on Tuesday at the upper end of that range. Queensland-sourced feeders are a little behind those from further south at present.

Feeder prices generally spiked during April before drifting lower for a period, recovering towards the end of May. Today’s figure is up 25c/kg from our previous (November) budget, and 50c/kg higher than our budget this time last year. Today’s figure values our typical 450kg feeder at $1687.

Ration prices

Finished ration price on a typical Downs feedlot at present is $450-$460/t, with some a little higher than that, based on performance.

Hay shortage is impacting some southern feedyards at present due to strong paddock demand in drought areas, but the effect on ration price in the Downs area further north was described a ‘small.’

Feedgrain prices ex downs are currently around $345/t delivered Condamine for wheat. Cottonseed prices are again on the rise.

This time last year our trading budget had Downs ration prices still being quoted at around $490-$500/t, with all ration ingredients remaining high. Some rations back then were still as high as $520/t, while others were back around $480/t, depending on performance.

Cost of gain

The above ration price figures suggest cost-of-gain on our benchmark feeder steer gaining at 2kg/day at 343c/kg – a 25c/kg drop on this time last year.

With feeders purchases currently quoted at above at 375c/kg, that COG (343c/kg) is slightly advantageous for lighter cattle being fed on, but not by a material margin, one lotfeeder said.

“I don’t think those numbers would motivate many lotfeeders to chase lighter cattle to feed on,” he said. “Maybe it looks a little more attractive for black cattle, where there is a distinct shortage of feeders with weight. Put a 450c/kg black feeder purchase price against a 343c/kg COG, maybe those in-between weight cattle that might be a bit cheaper look more attractive.”

Breakeven 703c/kg

Based on the figures above, a breakeven on our feeder steer is 703c/kg, up from 680c/kg back in October.

Forward contracts on grain-finished cattle

Southern Queensland forward contracts for finished 100-day ox for October delivery are at 700c/kg, up from 680c a month or two earlier.

At those figures, today’s trade on a steer of average ADG performance (2kg/day) would produce a $10/head loss ($34 loss back in October), while for better performing cattle (2.2kg/day), the breakeven drops to 680c/kg, delivering a profit of $90.

Any feeders coming in with a little compensatory gain potential might nudge closer to the higher ADG figure. But looking back a couple of months, the earlier prolonged wet weather and high heat periods were certainly not good for feedlot cattle performance, one supply chain manager said.

What’s evident at present is that while there’s not of a lot of margin at the buying-feeding stage, big margins are being recorded among grainfed processors, as strong international demand for quality table meat emerges this year.

That’s a combination of rapid declines in US grainfed production, increasing demand for chilled cuts into the US, as well as the inability of US grainfed beef to access the China market, due to US plant China registration issues, Trump tariff impacts, or a combination of both.

Market watchers say there is still plenty of upside for 100-day grainfed forward contracts on cattle in coming months, with 720c/kg looking likely for November of December delivery cattle.

Processing capacity limitations may be one limiting factor in higher forward contracts on grainfeds in coming months, but processor margins have recently been described as “close to as good as they have ever been” at present.

About the 100-day grainfed trading budget

Beef Central’s 100-day grainfed trading budget calculation is based on a standard set of representative production variables, ex Darling Downs. The calculation is built on a feeder steer 450kg liveweight, fed 105 days; 356kg dressed weight at slaughter; ADG of 2kg; consumption 15kg/day and a NFE ratio of 7.5:1 (as fed); $25 freight; typical implant program. Bank interest is included. The trading budget should not be interpreted as a comment on the viability of the lotfeeding sector – it is simply a gauge of the exercise of buying feeder steers, sending them to a feedlot for custom-feeding, and then selling them at the expected grid price at a processor. The opportunity costs of the exercise can easily be misunderstood.