Markets

Chris Howie: Rain boosts optimism heading into winter

Chris Howie , 06/06/2022

Chris Howie offers his perspective on market trends and opportunities in coming weeks and months, drawing from his own observations and from a wide contact network of producers, agents, processors, industry associates and leaders developed during his extensive career as a livestock agent. Chris is Stockco’s Business Development Manager.

 

Well the rain has filled in the dry areas of South Australia with most states up and away now for the winter growing season. Optimism is up and about and I hope we can land a normal spring to really put the cream on the scone.

Phones: I noted with interest an article about the phase out of 3G in country areas. I doubt the spokesperson was around when original 90’s analogue or CDMA was shut down in 2006 / 2007, but everything seems to smell the same. A massive number of country users losing coverage as their networks are decommissioned. I have travelled a large part of Southern WA, South Australia, Wimmera and southern NSW this month with an iPhone 11. Facts are most of the time when travelling in the country, we are operating on 3G with only 1 to 3 bars – let’s see what happens.

Stud safeguard: The FMD outbreak in Indonesia, Java and Bali is a lot bigger than the last time this disease had a run.

For the stud community I strongly suggest collecting eggs, embryos and semen from your operation and putting into storage. To have your life’s work disappear because of an outbreak is too hard to comprehend for many. It is important to know if your enterprise is captured within a containment circle there is no room for negotiation about the breeding value as industry will follow the cull protocols to eliminate the outbreak risk. FMD information

Sheep and lamb

WA COVID impact has really created some issues within the processing sector since April. Quick chat with Paul Gault from V&V Walsh one of the leading lamb processors in the West. The eastern states issue in January saw the mandated mask wearing apply a bit of a brake. In WA masks were not and the community transmission has been widespread. This created process worker absentee increases with single days that has escalated quickly to full weeks with limited staff available. Combined with the lack of permit workers and ability to export meat it continues to compound the impact on prices during May even though demand for lamb is still strong.

Wayne Driscoll, AWN Manager, Horsham thinks it will be an interesting year with the cost of putting the crop in and a large acreage of canola at the expense of running less livestock. The recent rain was needed in the greater Wimmera with the recent 15 – 25 mm helping the grazing crops in what is considered a moderate start to the season. Wayne said “we are into the tail of our contract lambs and they have been performing very well. Lamb numbers purchased are down on last year and many grain feeders are not prepared to operate at current margins. Mutton is hard to source at present with very strong demand.” We both think the seasonal pricing volatility is not far away for lamb and mutton.

Stuart Kyle, WesTech Ag Kyle Livestock agency at Kaniva said “the recent inch of rain has got everything balanced again, before the reliable country was dry and areas around Nhill and North were good. Sheep numbers have remained static but more crop going in. Warm weather and minimal frost have good feed growth and lambs are solid and on the do. As with other areas many traded lambs have been on a much finer margin than the last couple of years with some farmers not trading at all after a good harvest.”

Good chat with Alex Collins, Director of McKean McGregor in Bendigo. Alex said the auction yarding’s at Bendigo, Hamilton and Horsham are presenting much smaller numbers with heavy lambs nearly done. Agency restocking demand from SA has been limited in Victoria because of their season and many grain cropping operations that normally value add are not trading this year. Alex commented that much of the McKean McGregor operation is based on forward contracts with specialist feeders. Lamb margins have been good on grain until the last rise however exit timings from June to August should see hooks pricing correct this. Many are focussing on weight gain from grazing crops and are well set to supply into the peak demand period.

Dick Gleeson, Branch Manager Elders Inverell (still upset about the controversial Richmond loss to the Swans Friday) said the lamb job in the Northern new England and NW slopes is ordinary. They are still getting flies in May and most of the feedlots have cleaned out because it is too wet and no performance. Very few have put any number of lambs away and the main buyers are still being impacted by staff shortages.

Lack of mutton has started to push ewe values again leading into the winter before the agricultural shearing season starts. Store lambs continue to flat track with plenty of opportunity for those with crop. Speaking to agents and feed lotters it is becoming apparent the rise in grain price is seeing grain being sold instead of fed to lambs. In turn agents suggest numbers being put out for the winter supply are down on last year.

Every year we are seeing the sucker run start later with joining moving back. Suckers will still appear in July because of the favourable conditions however 1st drafts will not be in significant numbers. The early lamb number powerhouse is the Riverina and larger drafts will be later August. Trade weight supermarket lambs will be the first to really spike the market purely on the back of limited numbers.

Wagga yarded 39,000 Wednesday which is uncommon for this time of the year as lambs were carried through on excellent feed. Tasmania shipping stopped by weather for last 3 days has seen a spike in lamb and mutton price across most major yards. Best mutton is nearly making the same as lamb.

Cattle

Andrew Hosken, Hosken Livestock consultancy, Tamworth said demand for 200 – 360kg heifers is still very strong. Especially british, santa, euro cross and flat backs. Orders are quite flexible, but the difficulty is establishing if the numbers are available and what rate will buy them. Andrew said putting the supply and demand lines together is as simple as a phone call if you are looking to sell.

Bruce Cameron, Elders Northern SA cattle manager said the SA pastoral country is outstanding. 25–30mm on the Strzelecki & Birdsville tracks after big rain a month ago has the triangle Port Augusta, Alice Springs and Broken Hill looking very soft and green. All the channel country rivers are flowing nicely with Lake Eyre South running into the Northern lake – this is very rare. British x station steers 280 – 300kg are bringing $5.80 – $6.30 with plenty of enquiry. Bruce sold a line of station Ang x heifers PTIC to angus at 330kg for $2200 “They might not be as flash as the heavy inside cattle but it is good money on station”

Attended the AWN livestock conference in WA this month and spoke to Phil Petricevich, AWN WA cattle manager. WA is very mixed for season with much of the early growth driven by thunderstorms. Cow market fell by $1/kg over last 6 weeks from a top of $3.80 but has rebounded with rains in the Fitzroy / Broome areas to $3.40 with muster halted. Processor rates are being impacted by COVID staffing uncertainty which has flowed into the store market. Store competition has been softer with a dry start in SA and parts of Vic removing these orders.

Ron Rutledge, Nutrien Livestock Operations relayed the main run of livestock from the islands Tasmania, King and Flinders is all but done. Carriers in Tasmania said they have not seen as much livestock shipped to the mainland in recent history. Shipping delays from Tasmania created a backlog and downward pressure on pricing over the past 3 months. The decks have now cleared but the shipping logistics from King and Flinders Island have caused some issues this year.

Bull and Ram sales are here already. With the approach of the main bull sales for NSW and the ram sales for WA / Tas / SA and Victoria vendors should consider implementing some basic bio security protocols. Foot bath for all people entering the property and a register of all who attends – not just the buyers. Perhaps ask any who have recently been to Bali to stay home also.

Heifers have come off the boil with the ready to join models now gone. Less $ per head but a significant drop in liveweight also creating opportunity to step into a ideal winter trade. Steers have started to find their new level and expect prices to hold during winter period with feeder values being put under grain price pressure.

Processor grass programs started as a small niche idea. Little did any know how big it was going to become within the Australian red meat industry. Andrew Hosken suggested taking the time to register and access these programs is very well worth the effort for beef and lamb. Even when supplementary feeding using grass accredited pellets allows access to a premium market. Nearly every processor and supermarket has demand for grass fed and it is worth your while to investigate before your sale program begins in the spring.

Positive outcomes: PIRSA and MLA in SA ran their second series of Red meat and Wool Growth programs targeted at the agency community in May. This is the only forum I can find of this kind being run in any state. Centred at Burra, SA – 25 agency and industry attendees over 1 and a half days gained an understanding about helping their clients focus on survival rates in lambs, cattle feed lotting specifications and the use of existing technology to improve turnoff kilos and value.

EID for sheep. One positive aspect from the above seminar was discussing the benefits of using electronic ear tags (EID) in sheep to improve productivity with lambs. Keeping it simple and focusing on the small 10 month window from joining to lamb sale.

Long term wool / breeding trait graphs have their place but the short term benefits are what create engagement. Using EID tags to capture information and understanding survivability, pasture and weight gains aligned to single and twins really highlighted the upside for all involved. Weighing lambs and calves at marking time really puts money in your account.

FMD and lumpy skin diseases being so close to our shores EID in sheep has become a priority at a federal level and will start to be pushed a lot harder as a mandatory requirement. Having been intimately involved with the Victorian sheep tag roll out it is important that we learn from the difficulties experienced as agents and producers with the Victorian process and agree on a uniform approach across states. Basing the discussion on functionality and positive management outcomes the meeting at Burra showed a real acceptance of the benefits of the traceability piece as an overall package.

Sadly the same discussion held in another state the following week saw a resistance to this approach by the people in charge because “we do things differently to Victoria / we need a 4 way draft not a 3 way”. Hand on heart I have been in more sheep yards across Australia than most and definitely more than any of the bureaucrats in the various states. By getting this parochial shit out of the way implementation will be relatively simple. Technology has come a long way since the Victorian roll out. If all states involved designed a uniform plan to provide process and procedural advise to industry this will save a lot of money and angst with a positive industry outcome.

StockCo has a new owner in Heartland Bank and has also launched a new website designed for ease of use to help find information for livestock finance. With the advent of the StockCo funding model in Australia it has been a real game changer for many that once relied on agistment to utilise excess feed. Producers can now create the trading margin within their own enterprise without altering their main financier’s security position.

Hawker races really showed the importance of these community events after a considerable dry period. Big crowd and excellent race fields saw the Hawker township really humming with more rain since. Knowing many of the retired Elders crew that attend these races I expect many butchers (7 ounce) shandies were consumed and into bed by 7.30

Opportunity

  • Taking the grain margin on your grain stockpile
  • Lambs for late June till August on crop
  • Shear early and take the mutton money
  • Cows and calves to split in spring
  • Buy plain larger frame cattle to improve
  • Planning your spring sale program now
  • Set up your spring livestock trading finance
  • Measuring your livestock performance and margin outcomes – just do it
  • August Agency and Supply chain workshop open to entries – Wodonga TAFE

 

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