Markets

Chris Howie’s livestock market wrap – March 2020

Chris Howie, 02/04/2020

Chris Howie, Stockco Business Development Manager, 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.

 

SORRY about the mix of subjects but “normal” seems to be a lost word in 2020.

I was worried about the opportunity and market forecast pieces I have commented about over the last 12 months because much of it was based on experience versus hard data. One thing I can say in reflection is the majority of the suggestions should have delivered a very nice return for those that acted upon them.

The last 18 months have allowed me to look at the Australian agricultural industry as an observer with the rare privilege of experience.

This time out of the corporate agency world has highlighted how much potential upside for agriculture across all aspects there is with the arrival of new technology, data, systems, genetics, consumer shift and preparedness to question the past.

https://growsafe.com/our-solutions/seedstock/?utm_source=beefcentral&utm_medium=mrecgeneticscentralbanner&utm_campaign=cropcalf&utm_term=300x250&utm_content=cropcalfSadly it has also shown me that many across all parts of the supply chain are still hiding behind bureaucracy or well-delivered rhetoric, yet remain more conservative and resistant to change than ever before. Missing significant opportunity – Same wheel, just a different coat of paint in old agency terms. The successful operators are nibble and seize opportunities with a sense of urgency whilst others just talk about it.

Considering the positive upside I have re-entered the workforce in a business development role with Stockco Agri finance (see separate reference in today’s People on the Column). The freshness of approach and focus on financing livestock trading really appealed to me. The ability to provide services to all agents, producers and processors in a completely agnostic manner is exciting as it allows me to maintain my existing networks and provide opportunity and assistance without pressure. If an agent, feedlot, processor or client does not feel the product suits their needs the conversations are still productive in other ways. Considering the value of livestock and continued rise in demand for red meat protein world-wide I am excited about the opportunity to work for Stockco.

Difficult times

With all that is going on in the world it seems the entire focus is on the issue at hand and all other aspects of awareness have not moved down the list but have faded away completely.

For Government bodies the education around agricultural biosecurity has been a thankless task over many years.

Cane toads probably didn’t help a lot. Numerous initiatives and promotions covering all aspects of livestock issues – lice, ticks, footrot, OJD/BJD, Brucellosis, Bluetongue and the list goes on, have all been targeted numerous times in many ways. The last truly effective program being the Brucellosis and Tuberculosis Eradication Campaign (BTEC) where everyone pulled together with a focused goal.

The “she’ll be right” attitude when discussing agricultural biosecurity has lived in Australia for a long time and more often than not it always happens to someone else so no changes are made by the everyday farmer.

When new process is introduced by industry it is viewed as a burden, not an investment in safeguarding productivity and international markets.

Don’t worry, budget cuts at Federal and State government levels during the early 2000s allowed some issues to get away from us all as well due to reduction of field staff and removal of remedial quarantine or fines.

I chat quite regularly with Rachel O’Brien, Field and development officer for Animal Health Australia (AHA), and the deja vu component of the current situation and livestock bio security is very real.

Let’s look at the current COVID-19 issue we have for the Australian population. Those returning home from overseas without thinking of the consequences are the only reason the Australian situation is where it is now. Why?? Because we are an Island!! We don’t have the common border issues of Europe, Asia, Africa or America.  We were aware the virus is nasty but our society thought process is “that’s only for other people because we live in Australia”

Having spent three years in drought, five months of bushfires and two months raising money for Koalas, I think we all thought that is enough hard stuff for the time being.

If anything, the farming community may be better prepared and match fit to handle this next piece of life thrown at us.

What does this mean for the livestock industry, you ask?

In 2015 I was privileged to do an Foot and Mouth Disease (FMD) tour of Nepal with the EU-FMD program. FMD has the same incubation time and is equally as contagious in livestock as our current issue.

Yet the awareness of the ramifications within Australia seem to be a throw away conversation piece because it “won’t happen to me”.

Take a couple of minutes to relate our current human situation to our cattle, sheep, pig, goat and dairy industries.

If FMD arrives all animal movements stop within the first 36 hours of identification.

Considering it has been in country for a minimum of 14 days when identified and if an animal is on a truck the circle gets 90km larger very hour this becomes a massive issue.

When dealing with people we do everything we can to reduce the risk and provide the best medical system in the world to help recovery. – social distancing, isolation, area shut down. With FMD the animals impacted are immediately culled to wipe out the source.

Some of you may be saying it is not the right time for this article. I suggest there is no better time and the livestock industry right down to the smallest hobby farmer need to become very biosecurity aware.

Following this theme I was speaking to Chris Van Dissel, Senior Animal Health Adviser for PIRSA in South Australia.

The issue of lice in sheep is becoming more prevalent Australia-wide, irrespective of the increasing value of sheep. Wool loss and degradation, reduced average daily carcass weight gain because of itching and impact on neighbors are all significant income losses for the producer yet we still have that core group who don’t care. Something that is so easy to control if managed continually gains momentum because of this apathetic approach by some sheep owners. If a concerted effort was made by all producers it would be amazing how quickly this issue could be brought under control.

Cattle

What a roller coaster the month has been.

Good rains early in parts of NSW and Qld set up the demand for the remaining weaner sales through the mountains, Victoria, Southern Tablelands and the excellent calf sales at Casino.

Northern NSW and Southern Queensland arrived with orders to fill and were not scared to have a go.

You have all seen the reports and $4 became the new norm with $5 liveweight flashing regularly.

We did see the feeder market soften after the ground dried out in the north and settled at circa $3.80 for a period. However, it seems to have moved back to $4 and a bit better now with feedlot residency numbers falling and still looking to secure for the winter block.

The processor export bottle necks created by the virus in China seem to have been offset by the falling Aussie dollar and the rush on supermarkets with red meat being a priority for shoppers.

I did see several pictures of empty meat displays but the “fake meat” stand was still fully stocked – I think there is a social message in this. In times of crisis if you are ignored, are you really needed?

Areas of feed are starting to appear and I spoke to Scott Hamilton, Hamilton Mortimer Agency, Narrabri, who has some agistment opportunities starting to come available.

Cattle numbers in the south will start to decline as they normally do from now on so it is very important to get the best conversion rates from your feed to supply kilos of meat into the winter.

Many have been buying light cattle allowing for compensatory weight gains to offset the price paid. Again it is vital to have the best animal husbandry in place to get the maximum performance.

Joined cows and cow and calf units are back in vogue with plenty making $2100 plus, with best I have heard over $3000.

When using market reports to do your sums on cow and calf units it is important to get all of the information before comparing values. Breed, age and condition of cow as well as the age, weight and freshness of the calf.

Comparing a five year old Simmy cow in forward condition with a fresh six month calf at foot with a cull cow and dry calf leaves only disappointment in the end result.

Sheep and Lambs

The lamb market was absolutely screaming at the beginning of March way earlier than anyone expected with sale yard prices lifting every day and hooks prices struggling to keep up.

Again the driver was significant rains that pushed up demand whilst slowing supply of stores and prime stock.

Sound advice from Xavier Bourke last month regarding taking the price available as we don’t know what is around the corner.

Hindsight is a wonderful thing but often acting on gut feel delivers the goods in our industry.

With lambs peaking at $9 + the market has now fallen back to mid $7 dollars.

There will be a few producers worrying about the price paid for feeder and backgrounding lambs compared to the current price.

My advice is do not panic.

We often see the lamb market soften in March as late numbers are pushed to market with feed running out prior to the paddocks being turned over for cropping.

Lambs are a bit like the share market, you only crystalise a loss when you sell. Stick to your plan and keep feeding them into the winter because numbers are falling away and historically supply and demand dynamics kick in from Easter onwards. Teeth shouldn’t start cutting till about June as a rule.

Ewes for breeding continue to draw plenty of attention and significant numbers from WA have been purchased by NSW, Vic and SA agents. Not only has this provided supply for the East but has been welcome support for the West who are still very dry. I would continue to look to the West if trying to source merinos.

Lamb feedlotters – April change of season used to be the worst time of year for pink eye in sheep when suppling live export orders.

Overnight the entire draft waiting to be loaded could be impacted by this short term but very contagious affliction.

Be mindful of this when buying lambs to feed and also watch those already in feedlot as it will impact feeding and watering.

Opportunities

  • Any sheep with a start in the jacket
  • Females – sheep or cattle, that you can polish up and offer in the early spring.
  • Often the second draft (not the tail)
  • Heifers to supply into the trade categories August / Sept
  • Register for EU or Grassfed programs
  • When selling/buying livestock get a signed contract

 

 

 

 

 

 

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