Markets

Chris Howie’s market wrap: Grass contracts offer good rates

Chris Howie , 03/05/2021

Chris Howie offers his perspective on market trends and opportunities in coming weeks and months, drawing from both 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.

 

The African swine fever impact is still very significant and irrespective of who is supplying who, this shortage is creating a product hole which in turn creates demand.

It is important to remember in Australia we cannot eat all we produce, so like NZ we are at the mercy of the season.

Whether beef or lamb, world demand for red meat protein is continuing to grow.

At present NSW and Qld have grass and therefore supply is based on when an animal is ready, not a forced sale.

Yet the SA and Victorian season, other than the far south, is dry and powdery with livestock coming onto the market because of the season and approaching tractor driving season.

No drama as this is the normal cycle most years, hence the reason the prices don’t move a lot.

Cattle

Cattle are still holding their own but a couple of interesting reports.

NZ at present has run into autumn with a dry season. Well-bred 200 kg Angus heifers are available at $450 with steers wandering either side of $3.00 liveweight for 320kg models. Before we all jump on the calculator and work out the cost to get a ship, the rules don’t let us unload them into Australia. A recent sale in Oklahoma, USA however offering 11,000 cattle saw best steers at $5/kg with Brazil now looking at a supply shortage. Swings and roundabouts.

Feeder demand is still very strong – especially for the performance end of the blacks and cattle under assurance programs. Grass contracts are available out till August and September at good rates also. I am a great believer in taking a piece of these grass contracts if you are going to run cattle on good pasture or crop. Try and have them signed up by mid to late July as we never know what the Spring start in September will look like. If you have cattle to sell – irrespective of breed do your homework on what supply box they fit into and make those buyers aware of what you have.

The demand for trade cattle is strengthening in all states. Especially good shop bodies from 220 – 280kg dressed with some cover and a dash of Euro.

Pricing cattle – with the current levels it is very easy to become blasé about the price being offered. Do yourself a favour and always look at what the return will be on a dollars per head average, not just the cents per kilo being offered. At $4.50/kg liveweight if you miss the correct marketing window by 10-15 percent because you have said “she’ll be right” that works out to circa 60 cents per kilogram. Not so long ago that may have only been $50 or $60 per head – now it may well be $300 per head.

In the sheep section I speak of an emerging breed in the Aussie Whites. The Speckle Park Breed in cattle is making some tremendous inroads also. Originally a lot of cattle growers were only looking at the cosmetics but now some true performance data is starting to appear. This is evident with a stud operation being fully focused on commercial performance.  Andrew Hosken, Livestock Consultancy, Tamworth sent me some kill data this week. What caught my eye was the dressing percentage and the MSA grading result which we all know directly relates to dollars returned.

Andrew outlined this B double consignment: “50 Speckle Park X cows a/c Minnamurra Pastoral Co, Averaged $2288.90. Dressing percentage of 54% on cows or 51.4% on a full paddock weight. The cows were delivered to HW Greenham’s Moe plant in Victoria. All graded MSA – 100% which is rare at best of times. Only discounts received were on a few extra heavy weights. The average MSA index -54.14(up to 60.55) All on old cows after an 1100 km trip”. What a great result. Minnamurra have introduced Speckles into a very high quality Angus herd and the proof is well and truly in the pudding.

Sheep

Mutton continues to trade strongly in all states. Speaking to Paul Keppel, Elders Narrogin agent in WA, he recently sold XB lambs destined for NSW at $3.60 liveweight. Mutton prices are ranging from $6.20 – $6.40 The recent cyclone that went walkabout through the South of WA caused considerable damage to farm infrastructure but did deliver much needed rain well aligned to the winter cropping program.

In the SA and Victoria above the Penola to Horsham line the season is really starting to bite. Early summer rains destroyed the dry feed and now paddocks are bare and dusty. This in turn has seen a supply of lambs come on which have processor requirements covered into May. Lamb prices seem to be holding around $7.60 – $8.30.  As I suggested last article “prices just wash around” during April. No different to any other year if rain doesn’t appear numbers will continue to come but once we have a break the tractors take priority and price volatility appears very quickly.

Over the years I have seen a number of “trendy” breeds appear through all species, including large poultry. Some are very good but just never achieved the volumes or uptake to become mainstream, or the performance values related to carcass yield etc just didn’t stack up at the processor. One feedlot buyer once told me he is not interested in “Zoo breeds”.

However, every now and then we see a true performance breed appear. Me being an old wool man at heart, I remember Steve Ridley, Elders Goulburn telling me 10 years ago keep an eye on the Aussie White. I must say I had no idea then what they were. Over the past 12 months this breed is shooting the lights out on growth, yield, price and fertility – both Stud and Commercial. Speaking to Craig Pellow QPL, Temora, who has been involved with this breed since inception, he had just sold a run of lambs from a mob of ewes that delivered just under 200 percent lambs. The wethers averaged 25kg and 27kg with a return of $240 – $270. Their sisters were sold for $600 with enquiry outstripping supply. The age of this run of lambs was 4 – 5 months!! All I can suggest is if you treat this breed as small cattle that have multiple lambs and calculate the kilos produced per hectare you are in the correct head space.

Industry events

As I mentioned last month we have had a lot of industry events covering a lot of topics. The crowds have been excellent in numbers but when you pare back those attending the majority are service providers, banks and industry level representatives. The overall percentage of producers was far smaller than I would have expected considering the quality of the information.

If you haven’t had the opportunity to listen to Jason Trompf discuss sheep productivity and lamb survival do yourself a favour. Jason’s approach appeals to me as he is not afraid of causing discomfort through his comments. The main take home was how many of your ewes actually raise a lamb? The numbers suggest only 60-70 percent which means the balance are glorified wethers. Concentrating on improving this number and understanding the combined meat wool and lamb proposition in dollar value can very promptly improve your bottom line.

Another very interesting topic was covered about the use of medical and military research that can be applied to the animal health and livestock husbandry industry. Understanding how various stress periods or pain become fixed points in the development of the animal, which in return improves or impedes the growth rates of the animal in question. What I will say is this discussion needs to be approached very carefully. The Victorian government as part of its review of the animal welfare legislation had the term “sentient being” pop up in a very small stand-alone paragraph in one of the papers. Within the livestock industry this concept if accepted within law opens Pandora’s box for where the line is drawn on animal welfare outcomes and commercial outcomes being delivered – common sense must prevail.

Well Beef 21 is here, and the excitement is noticeable in all that are attending. I had the privilege of seeing one of the Pitch in the Paddock presentations for next Wednesday and all I can say is if they are all like this it is an event you cannot miss.

I will be attending on the StockCo stand (Site OS 126)nd if any of the readers want to have a chat about what I write please introduce yourself. If you don’t like what I write make sure we have a beer and talk about how to improve.

Opportunity

SA / Vic Ewes and lambs if staying dry

Treading water until June then buying Cows and Calves

Lambs ready for late May / June supply window

Do your homework on the box your sale stock will fit into

Get to an industry event and learn something

Money on the Reds next week

 

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Comments

  1. Tom Redden, 03/05/2021

    Hey Chris, once again great article and analysis of the current market and opportunities. Always enjoy reading these.

    A quick question you talk of grass contracts being available for Q2/Q3 this year? If you can say what processors are offering these?

    Cheers
    Tom

    • Chrishowieagri@stockco.com.au, 03/05/2021

      Thanks Tom. I will be in touch.
      Chris

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