Markets

Chris Howie’s southern market wrap – March 2019

Chris Howie, March 29, 2019

Chris Howie from Agri Careers and Consultancy offers his take on southern livestock market trends in March, 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 and former Elders national livestock manager.

 

 

“Assume” is a very dangerous word in the livestock industry. It means you “thought” you knew instead of finding out. My apology for incorrectly putting the wrong trading name against Craig Pellow. The correct title is Craig Pellow at QPL Rural – Temora. Did give cause for a laugh and another conversation so not all bad.

Cattle

Morgan Davies, Elders Bairnsdale reported on the Mountain calf sales – “sale day landed without rain in any of the major cattle buying areas. The New England is very dry and Tamworth, Gunnedah, Inverell sales came forward from traditional April sales into early March diluting available buyers.” It must be said that history does count for something with repeat buyer support making the sales at Omeo, Benambra and Ensay better than expected. When Morgan compared other sales on for that week it looks as though the Mountains averaged $100 – $150 per head better for similar cattle. Morgan followed on with “no big orders, just calves going everywhere in smaller numbers. The better money followed the heavier steer calves with $3.00+ per kg for the over 300kg models. It seemed the rate corresponded to the weight ranges with 250kg models making $2.50 – $2.80. Heifers ranged from $2 – $2.50”

Pat Cleary ECM at Mossvale said Yass weaner sales started with 6000 at SELX last Friday. “Many of the calves were being sold earlier due to the crappy season and were lighter than normal. However with the rain starting just as the sale started prices defied the season and good gains were recorded with heavier Angus steer weaners 280kg plus making $2.80-3.20 c/kg and the lighter Angus steers making $2.90-3.50 c/kg.”

Change of season, planning time and crystal ball

Now is the time of year in the south to lift out of your day to day routine and put a day aside to start your plan for the coming year’s turnoff – autumn calving / lambing is on us. Make sure you reset your thought process so you can concentrate on numbers and facts. Worrying about the leaking pipe or feeding stock will only muddy the process and you will end up with a motherhood statement for a plan with no facts wrapped around it and no measurable result at the other end.

What will you need to make a successful sale plan? Historical production numbers – in kilograms if possible.

Ask yourself the tough questions: Why was this the amount we produced? Is it acceptable? Can we improve? How do we improve?

Then you need to map Target markets, Time frame to achieve the selected specification, Cost to achieve the goal, Where to obtain the best advice. Building mutually beneficial relationships during this process will allow you to do this year on year.

As Morgan Davies said, “Many areas are down to the family China when it comes to retained livestock. The rebuild of herds and flocks needs service providers such as banks, agents and government to provide the time to help producers plan how they are going to manage this next stage.”

Simple things such as Bio security – animal and weeds, are inherent risks when bringing livestock in. Make sure your research is done – ask questions and get the appropriate paperwork. Animal Health declarations are a good place to start when buying.

Opportunities

PTIC Heifer/cows are always hard work when feed is short. At present they are providing excellent buying for those looking to upgrade their cow herd or reduce the overall age demographic of your herd. If you can cash a 6–8 year old cows in for a $1000 and replace with a quality first calf heifer for $1250 the changeover makes good sense. But you will need to act quickly.

Trading is providing excellent support to sales and good returns at present with the ability to sell a finished beast and convert it into 3 smaller articles. Feed costs for lot fed or supplementary feeding at $500 per tonne does highlight the need to work out how your business will manage the trade if you are new to this form of production.

The advent of the grass fed programs initiated by some of the processors has been a god send through these hard times. It has provided an end game for those investing in feeding towards this specification which in turn has created market opportunity for lighter cattle.

Plenty of dry areas around but at least we are starting to see places getting a start. Rain through the southern tablelands in NSW – Mossvale, Bega and down into Bairnsdale have started to provide areas that are actively looking for livestock. At the time of writing the 2 cyclones in the north are providing rain to the Pilbara in WA and the Barkly tablelands. Hopefully their tails sweep into the southern areas of Australia and set up some winter weather patterns.

Pat Cleary ECM said “the Moss Vale area received 100-170mm last week. As with most areas it’s been a particularly tough 18 months with the driest autumn and winter on record in what is considered a safe rainfall area. It’s a pretty empty paddock here and heading into winter we need to rebuild cow herds and get future Bullocks ASAP.” Pat went onto say “Its Bloody marvellous how quickly the rural communities regain confidence and seek opportunities in the beef market with a rain and now with supplies dropping off price gains will continue”

The supply demand balance is so finely tuned at present that any area receiving rain has had an immediate supply and price impact on livestock for sale. This will create price movements specific to an area and a period of volatility that is hard to predict. All agents, processors and feedlots are looking at the supply quandary for livestock going into the winter. Reliance on traded livestock will be far greater this year than normal with the many breeders who have been forced to sell early creating a supply hole. As the rain areas expand it is important to look for the short term opportunities that allow cash flow as your breeding operations get back on their feet. Agents, processors, feedlots and exporters are all happy to discuss supply if you are planning in advance.

Just an observation; For some of the older heads over the last 5 years the Bureau of Meteorology have become over optimistic with their forecasts. I don’t know what the change internally has been but these forecasts are a glimmer of hope to all on the land and when they don’t eventuate it is emotionally draining. Not to mention the sale programs and stock movements that are put on hold in anticipation of rain. It is not an exact science but I think the reporting needs to get back to the old day – under promise and over deliver.

 

Sheep

The store sheep market took the traditional March hit as expected. This was magnified by the season. Numbers applied pressure to the processor trade and export pricing. Not because the customer demand has fallen but because it is physically impossible to process the numbers coming forward. Basic economics of supply and demand activate and the sale yard becomes a destination of last resort instead of a planned marketing option.  Lambs hovering between $6 – $6.50 and mutton pricing been in the mid 300’s dependant on condition score. Although mutton has been very volatile dependant on sale yard or area determined by yarding’s. Plain, drought affected mutton (and cows) became a very difficult item to shift over the last month.

The Merino field days at Burra last week were a breath of fresh air. The rams on display were as good as I have seen for many years and the positivity within the Merino breeders and producers about the future was quite uplifting. Wool, breeders and meat – what a great money making combination.

Nick Wadlow, the President of the South Australian Stud Merino Breeders said “Visitors to the long held event were optimistic about their Merino Industry. The talk was not about the drought but more about flock rebuilding and breeding programs. Breeders are tuned in to the profit drivers of their enterprise and are looking for genetics that will increase their wool production, growth rates and give their flock higher weaning percentages. Studs are re-evaluating these drivers to advance the productivity of Merino and terminal lamb enterprises. With the dual purpose Merino taking full advantage of the sustained profitable wool and sheep meat markets. The Dual Purpose Merino gross margin is now consistently outperforming all other enterprises.”

Also spoke to Andrew Dennis, Independent wool consultant, at Burra. Andrews’s time in international wool trading and his extensive Chinese and European end user contacts provides great insight for any wool producer. “The recent lift in the wool market prompted by the South African FMD outbreak has now run out. Prices have eased back to the previous levels which are still very good, sitting around 2250 cents clean for 21 mic, 150 cents better than last year. Last week’s pass in rate of 23% amazed many considering the values and it seems emotion not fact around marketing and reserves may have entered the decision making process. Early indications are demand from Europe is relatively weak going into their summer.” After chatting to Andrew and wool brokers my opinion is selling wool as soon as it is ready for sale or fixing some forward contracts sounds like good business to me.

Opportunities

  • PTIC Females
  • Plain cows
  • Store lambs / steers / heifers with some frame
  • Lots of merino ewes
  • Light heifers (Straight colours) – keep running them like sheep
  • On younger trading stock at this time of year make sure you are aware of age and dentition. This can be the difference between a good trade or an average outcome because of dentition down grades.

 

www.agricareeradvice.com.au

HAVE YOUR SAY

Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.

Comments

Get Beef Central's news headlines emailed to you -
FREE!