Markets

Chris Howie’s livestock market wrap – August 2020

Chris Howie, September 3, 2020

Chris Howie

Chris Howie offers his perspective on southern livestock market trends, 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.

 

So, what do we do with this grass?

A lot have been waiting a significant time for feed in paddocks. Some areas, such as Wagga it may be experiencing one of the best winter seasons ever. Leading into spring and looking at the BoM forecasts suggests more moisture to come.

So, what do we do with this grass? In the past using feed by making a ‘gut feel guestimation’ is what traditional graziers have done: “I think there is enough feed for 100/1000” is a commonly heard comment when a grazier is speaking to their agent about feed and buying livestock in. My question to the producer, is what have you based this number on?

The BoM’s latest rainfall outlook for September through to November.

Some graziers do an exceptional job running 700 instead of running out of feed trying to finish 1000 because they took the time to feed map their property.

My statement: The quality of feed available is too good to waste so putting some simple livestock production science behind it seems a no brainer. Every decision you make after this is then based on fact – available feed quality, numbers it will support, average daily weight gain, purchase weight, target market weight, sale window.

Calculate the quality and quantity of your available feed and convert that to weight gain and multiply by number of head? I can hear the comments – “Don’t tell me about boats, I know boats”. Just going through the process may well verify what you already do well or provide an opportunity based on fact.

Other than grass finishers every animal production unit from fish to feedlot cattle understand feed conversion ratios. So, what is stopping us doing this with grass? Nothing!!

Rob Inglis, Elders Livestock Production manager at Wagga and I speak regularly about the feed opportunities aligned to trading livestock. I have asked Rob to outline the benefits for the Beef and Sheep Central reading group.

Rob says:

“Tell graziers what they need to know; not what they want to know”

Exploiting surplus feed

With the current feed wedge and the expectation of above average Spring and Summer rain, the challenge is how to convert all this feed into animal protein (meat, milk or wool).

While quantity is almost assured, feed quality or the continuation thereof may not be. A subtle change in feed quality, measured as digestibility, can have a profound impact on livestock production. A 10 percent reduction in digestibility can halve daily weight gain, and as we know “weight beats rate”. The problem, in most cases, is that a slowing in weight gain or even weight loss is very difficult to detect unless weighing stock weekly. Every day stock lose weight, adds three days to their finishing time.

When trading stock, forward planning is essential. Time is money, so targeting a finishing date and weight will provide some structure. This can be as simple as making an assessment of feed quantity and quality then calculating stocking rate and supplement necessary to meet requisite growth rates. When growth rate and time to finish are a priority, finance costs become less relevant. This works for pastoral areas also.

A Livestock Production Advisor, should be able to construct a plan which would include a feed budget, best fit stocking rate, appropriate animal health treatments and predicted weight gain. Regular reassessment of feed quality and quantity as well as livestock performance will ensure a successful outcome.

Fine tune your trading

·       Livestock Production Advice and Livestock trading make perfect bedfellows.

·       Assess pastures and complete a feed inventory before purchase. This will take 90% of the risk out of the trade.

·       Design pre and post-delivery protocols and vaccination/drench programs to ensure successful trades.

I agree with Rob 300pc. Irrespective of shirt colour the use of specialist livestock production advice to help with feed mapping is the first step in creating additional productivity AND aligning your feed to your target market window. Agencies that don’t have an LP advisor can easily align themselves to one within their area to help support their client list.

Tasmania

Nutrien Livestock and ALPA President Warren Johnston has supplied the following report for the Apple Isle.

Ample rain across much of Tasmania (also snow for the first time in many areas in 75 years) has Tasmania set for a fantastic spring flush of feed.

Sheep and Lamb prices, like the mainland have been affected by abattoir closures and restrictions on kill space. Tasmania has experienced a reduction in processing facilities & saleyards over the years and with limited space for sheep there is a heavy reliance on mainland state processors and store buyers for producers in Tasmania & surrounding Islands.

Saleyard rationalisation is in its final steps with the closure of Killafaddy yards at Launceston.

Powranna’s new TLX complex has opened allowing larger offerings on a weekly basis to a broader group of buyers.

Warren said, “We are in a great position leading into Spring and given seasonal conditions and a later calving / lambing pattern we can offer lambs into store markets that won’t cut teeth till later in ‘21. The March to May run of weaners are of excellent quality and well worth considering taking the trip south to buy when the time comes”

Cattle

The feed situation is really firing the store cattle market along. The “New Norm” of buying off electronic sale platforms has found its feet during the stud sales and is now flowing through to the store sales. Couple of connection glitches but everyone is getting a bit more tech savvy. Remember the most important part of any sale is delivering what was described. Don’t try and blend the “dogs” in, leave them behind – it saves a lot of issues.

Lighter types are being driven by available grass with many between $5 – $6/ kg. Females are the main topic with heifers creating a lot of interest as potential breeders. PTIC females seem to be causing the next price ripple. I think more to come, especially if Queensland get early rains and it continues in the south.

Trade and export pricing is holding with slight variations of 10-15 cents either way. The end of September normally shows the first price resets with trade numbers starting to improve. Supermarket supply also saw a need to spread the processing locations to gain quantity and quality with some above $7 dressed contracts around. This has also kept the domestic pricing quite strong across many areas. Again, the grass-fed quality will be very good in spring and numbers may flow earlier than normal in the warmer areas with some exceptional daily weight gains being reported off grass.

Touched base with Chris Manser – Green Triangle Agency at Mt Gambier. Chris has recently been elected to the ALPA regional advisory committee for southern Australia, well done.

Chris said “With cattle there has been an expectation it may have softened however it has continued to hold and provide some great results. 685kg bullocks at $3.94 and their lighter brothers at $3.98 suggests if you have any in the paddock unload asap to take the money.”

Gippsland has been very wet and cold with many heavy cattle not finishing driving demand. With the October flush of grass and crop finished cattle approaching we both agree now is the time to look at some forward prices. Chris said “finished cattle do not seem to be carrying a winter coat and with another recent 2” of rain calves are really hitting their straps in the South East and Western Districts. We have also seen some feeder orders operating in the heavy trade cattle sales above $4/kg to secure numbers.”

Nutrien Ag Solutions Damon Ferguson, Western Qld and NW NSW General Manager has provided a report for his area.

“There is a general confidence in the beef cattle industry and broader ag segment driving inquiry for grazing country through Southern parts of Qld with family expansion creating significant demand. Crops at every growth stage and late winter forage being planted on the eastern Darling Downs in place for the first wet change in Spring.

Heavy feeder numbers are coming forward with favorable pricing that would normally be held till slaughter weights. This may create a knock-on effect around supply of heavy slaughter cattle for the Autumn period next year. Large areas still unstocked with good subsoil moisture over much of our region and a large winter crop harvest predicted in areas north to the Qld border.

The anticipated cash injection from crop and feeder cattle should see strong demand for all re-stocker categories maintained through the second half of this year.  Exceptional stud cattle demand on the back of limited numbers carried through the drought and a shortage of paddock bulls are seeing averages and clearances at record levels in the early season sales.”

Damon said the transition of the Ruralco merger has seen Nutrien fully focused on the client and customer needs in a very busy time created by rain.

Sheep

I feel we are going to see an old fashion lamb supply vs demand bubble in September. The decision process: Do we want to shear them?

Feed is allowing many lambs to be held however this will start to compress numbers into the back end of September as the southern areas start to come online in October. JBS reopening Brooklyn is a bit of good news. My reports are it is unlikely many processors will ramp up capacity at this time – other than the Victorian relaxation of the COVID employee number – hopefully soon.

Early forward contract indications for lamb for November are $5.60 with November/ December at $5.80. It is not my place to suggest if these rates are good or bad although the first part of this article about utilising a great feed position suggest, on weight gain alone, there is a significant upside for graziers. If prices move up this creates a better return again.

I will add one caveat – over 32kg carcass will see significant penalties appear so be careful on taking your lambs too far. How long this weight discount will remain is most likely in the hands of export demand. Perhaps sell lambs early at the optimum weight and buy some in to take a second bite with a trade leading into summer stubbles?

The big breeder ewes sales will start to happen in September, most interfacing electronically – Jamestown, Hay, Jerilderie, Deniliquin, Lameroo, Pinnaroo, Wycheproof just to name a few. The enquiry around breeding ewes is really starting to appear across all feed positive areas with many looking to buy in and supplement their existing drought depleted flock. New Breeder financing options available are making this an easier decision for producers.

Ewe prices are seeing breeders considering keeping their ewe lambs to increase numbers. Make sure you set a standard of ewe to keep / buy that will maintain the quality of your flock. Class out any structural defects without exception as these always magnify within a breeding flock to the detriment of future sale sheep when the time comes.

New WA Livestock manager for AWN, Don Morgan dropped me a note.

In August WA lambs started at approx. 750 c/kg cwt but finished around the 630 c/kg. Mutton steady at 550 c/kg. Some very good lines of 1 ½ yo ewes for sale in the eastern wheatbelt. Don noted these are some of the best young ewes he has seen for some time with very good genetics.

Rainfall has been patchy with good falls around Great southern and Upper great southern supplying ground water which was short. Eastern areas were quite patchy and although some crops east are still reasonable the pasture feed short. Live export operators for sheep will being gearing up for the October reactivation also.

Opportunities

Buying store lambs at $90 – $120 – weight gain positive

Buy merino ewe lambs – look to the future

Sell finished cattle now

Forward contract cattle

Offering red tag PTIC cows – get them tested

Buying some additional breeders

Potentially large grain harvest bringing feed ration price down in the summer.

 

 

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Comments

  1. Michael Bull, September 3, 2020

    A retired Wagga agent who went on to other things once told me, there is nothing more silly than a grazier with green grass. My suggestion would be turn it into silage for another day

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