Markets

Chris Howie’s livestock market wrap – June 2020

Chris Howie, July 7, 2020

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.

 

SEASONALLY in the south there are still many variations of feed availability.

South Australia is looking okay around the ranges, mid north, Adelaide plains and south east. However, the northern agricultural and west coast need a rain.  The north west pastoral is quickly slipping and the north east pastoral have not had any recovery at all. The Birdsville and Strezlecki tracks as far as Mungeranie and Innaminka are not much good either.

A bright note for northern  SA cattle producers (and sheep into Queensland) is the Government announcement to seal the last 470km of the Strzelecki track which will see a sealed transport corridor into Queensland. In good seasons like 2016 this will also see a lot of cattle head south.

Western NSW starts to improve about 50km west of Cobar down through Ivanhoe into the Riverina and gets progressively better all the way to Coonamble. The feed from Nyngan to Coonamble is the best I have seen any where for a very long time. Thank god because when I was there 20 months ago it was beyond awful. Walgett through to Moree is ok but a lot of grass is haying off and another raIn would be welcomed with the New England even though cold now well set for spring.

Victoria and the Riverina are fairing very well with a mix of good rain and sunny days helping stock weight gains. I am looking forward to the quality of the new season lambs that should start to appear within 2 – 3 weeks.

The new drop: July is the time of year in the south that we look at new season lambs and calves. Predominantly autumn drop the April to June period for farmers and graziers is normally full of crop sowing, marking of lambs/calves, shearing, and managing feed availability.

As much as it seems odd, many producers forget to look at their sale program until about three weeks out from the truck arriving. This month I will put some simple ideas to you that may provide a better end result.

In the simplest terms every drop of lambs/calves has three parts. 15 percent Tops, 70 percent middle, 15 percent tail. By using this calculation, you can work out several simple activities that can increase your bottom line. How many tops do you have? By drafting them early what premium or forward pricing can you access? Are they good enough to be in the first run of new season lambs/milk calves at the saleyard where the processors look to flag their requirements?

Now we look at the bottom 15pc because the middle 70pc will look after themselves. Historically you will waste your best feed trying to make the bottom 15pc look like the tops.

Consider the following – are they just younger or are they struggling? If they are struggling will shearing/drenching/vaccinating /weaning help them? Can you turn your bottom 15pc into an extra 10pc in the middle with some livestock production advice and only have 5pc tail? As an example; For lambs the Eryvac needle removes a lot of the marking arthritis – small cost great return.

My suggestion is draft the tail off and get rid of them while there is green feed still available – not on the first hot day in October. Small stock are making excellent money and this will allow you to do a better job on the remaining drop and once part of your process run more breeders or trade some stock on the residual feed.

Tip 2: is understanding why you are selling at a particular time. A lot has changed over the last couple of years. Especially for pastoral clients. Often livestock are sold to meet financial requirements at a particular time of year.

However grass or custom feeding opportunities may provide the producer with the ability to take your 280kg calf or 32kg lamb through to the end user at 400kg or 55kg.

The issue with this concept has always been freeing the equity in your sale stock to meet your cash flow commitments. Financial products are now available that can assist your enterprise unlock this opportunity. A simple example are pastoral cows. Normally they are just cashed in and someone else fattens them up. However, the areas of feed available provide agistment potential with an opportunity to freshen them up and sell into a processor instead of a store market. Often opportunity is not considered because you are looking at your real time financial needs. Same applies to 5 year old ewes – sell as stores or cash flow them, put into a confinement joining and sell SIL or over the hooks.

Tip 3: Drafting sale stock. Drafting is an art that should not be taken for granted. “She’ll be right” can often cost dollars because the stock no longer meet the needs of the buyers. Simple tips to maximize returns. Draft to truck size, If in doubt take it out, size does not relate to condition score, buyers will always assess on the worst animal in the draft, understand your potential buyer requirements. Store and prime stock drafting are completely different – adapt to the target market.

Cattle

We are now into the time of year that locking price in for your Sept – November cattle is a worthwhile conversation. There are also some very good cow orders in the market for delivery into the spring. Worthwhile getting your agent to do some homework on these and having a discussion about the next three months goals.

Had a chat with Tom Baker, Principal of Woonalee Simmentals in SA. Tom said “the terminal sire market has evolved over the last five years with the traditional vealer producer moving towards well weaned, easy doing cattle aligned to special weaner sales. These weaners have become a targeted buying option for bullock fatteners, backgrounders and feedlots. The traditional vealer market out of F1 Hereford x Friesian cows is still there but not at the scale it once was.” When I was at Mt Gambier it was nothing uncommon to see pens of nine month old vealers over 400kg liveweight full of sap and milk creating a lot of interest in the buyers gallery.

Speaking to John Settree, Nutrien, NSW about the upcoming NSW bull sales. John said the drought severely impacted ability to carry any bulls through that did not perform. He said all the studs have concentrated on preparing only the best of their bulls and this will provide some great opportunities for bull buyers. The focus on performance genetics aligned to end user requirements has really gained maturity now and the data available will become more important with time. Bull inquiry is very strong with a focus on heifer bull availability.

Buying tip: In years of tight supply go through the catalogue and cross out bulls you would not buy at any price. Then bid on the rest. We can all pick the best ones and often get caught because they have exceeded your budget leaving you making an uninformed decision when a bull is in the ring. 

Sheep

Early June we saw quite a significant check on the lamb and mutton prices of $30 -$50 downwards. This lasted a couple of weeks and then we saw a solid rebound only to fall again last week. It is worth remembering that July is the normal maintenance period for meat works in the south and kills are often reduced or postponed – make sure if you have stock to sell you have made appropriate inquiry about delivery timing.

New season sucker lambs will start to appear very shortly. Normally the initial small trickle achieves excellent competition with supermarkets and wholesalers leveraging the marketing opportunity to the consumer. It is worth running a draft over the tops. The better feed situation in many areas may see the large runs of store lambs available last year shorten up considerably.

Speaking to Paul Kilby, Elders Streaky Bay in SA the season has turned and it looks as though many of the lambs will be weaned and sold early as light weaners. Ewes with lambs at foot are just starting to come onto the market also as his clients reduce stock numbers.

Processors have also noted the improved supply of lambs and sheep, especially from South Australian producers. Dry ewes and last years lambs out before they cut teeth.

The female demand is still very strong with the 3500 , 5 year old ewes I mentioned last article topping at $257 to average $224. I have been informed of some results also where growers have cashed their 3 and 4 year olds at exceptional money and will now sit and wait fro  a buying opportunity.

Wool

Col Donohoe, Michell direct wool manager expressed they are seeing no demand at this time with most forwards transacting in Feb / March 2021. Michell are predominately carbonising wool and have seen a 15% drop in demand which Col expects will be reflected in combing wools also. I asked Col his thoughts and he suggested the market may soften a bit further and it is unlikely we will see a significant improvement inside 12 months. The upside is the ability to take a contract position if you wanted to play the market after you have sold your clip.

COVID heads up– those travelling to SA must apply electronically before entering. SA entry requirement

If you are not provided with an authorisation number you will need to quarantine for 14 days. This new system started on July 1st and removes all previous approvals.

Opportunities

Drafting tops out of your new season lambs

Improver cows (or selling to orders available)

Cash flow your sale stock and target higher value market

July / August always provides saleyard buying opportunity

Sit at the table and look at your sale plan early

Training the future

 

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