Feeder cattle prices drop 10pc in a matter of weeks

Jon Condon, 31/03/2020

THERE’S been a dramatic retraction in feeder cattle prices over the past two or three weeks, with many export and domestic feeder categories falling 10 percent on values seen earlier in March.

Direct consignment paddock heavy feeder steers +380kg bought recently at 390c/kg liveweight are today typically attracting offers of 350c, and volume limits are being applied even at those rates by some buyers. Similar crossbred cattle were making as much as 410-415c/kg at extremes in places, in early March.

As often happens during times of market volatility, feeder quotes this week are in an extraordinarily wide band, with rates for flatback heavy feeders today anywhere from 380c back to 310c, in the case of one large NSW grainfeeder.

Some other feeder cattle buyers are not offering quotes at all this week, such is the disquiet about COVID-19’s future impact on export and domestic beef markets. The exception is domestic retail, which continues to soak-up product that would otherwise be sold into food service channels, or export.

This makes it difficult to define exactly where the ‘market’ is today, but two of the nation’s largest grainfed beef supply chains were this morning offering 350c/kg on heavy flatback feeders for their Queensland, NSW and Victorian yards, representing a decline of up to 40c/kg liveweight in a fortnight.

Both said they were booking cattle at today’s rates.

Reports suggest one of the largest grainfed processors in Australia has dropped 400 grainfed cattle a day from its kills this week, and is advising suppliers to hold-back market-ready cattle than have done their time by a week or ten days. That is apparently being driven by shift management workplace health & safety issues surrounding coronavirus, rather than market reflections, however.


“The big shift in price is a result of the total uncertainly in the trade at present,” a large grainfed beef supply chain manager said this morning. “Nobody knows where the market is, or where it could end up.”

“Regardless of what happens, there will be a major shortage of grainfed cattle by mid-year, because many feedlots are now 30 percent down on full capacity seen only two or three months ago. Some yards are now only 50pc full,” he said.

Evidence suggests the worst-hit yards are those focussed on Wagyu and longer-fed Angus programs, which are more heavily-skewed towards food service hotel and restaurant markets – currently in the doldrums, worldwide.

That’s not yet necessarily being supported in pricing for Black feeders, however, with rates as high as 395c/kg on public grids from large specialist Angus program feeders this week, for heavy feeders. Those cattle a fortnight or three weeks ago were worth 440c/kg – again, a fall of around 10pc.

US Cattle Futures dive

Meanwhile, US fed cattle Futures continue to get hammered this week, on the back of derivatives movements caused by concerns over COVID-19 and its impact on the US economy.

Cattle Futures are trading at US$99/cwt, down from US$126 in January.

Live US cash sales are nowhere near those levels, suggesting a big disconnect between live cattle and Futures markets, with Futures going down the limit for the second day in a row yesterday.

“Unemployment claims hit the market and concerned traders about the impact on beef demand,” the US Ag Centre’s Cattle Report said yesterday. “The US cattle futures have now uncoupled from the stock market and the evidence of a dysfunction is on view for all to see,” it said.


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