IN recent weeks there has been a lot of stakeholder interest in feeder steer price correlations and how price trends vary across the Australian states.
Along with the Meat & Livestock Australia’s Feeder Steer indicators reported regularly (including Beef Central’s own home page industry dashboard graphs), there is also an Argus Feeder Steer Indicator that is available to market participants.
The Argus Feeder Steer indicator specifically tracks Australian northern feeder cattle, using precise cattle specifications to ensure clarity and market relevance. It includes steers weighing 380-480kg liveweight, dentition 0-2 teeth, and predominantly Flatback breeds and crosses, defined as cattle with less than 51 percent tropical breed content.
Prices are recorded based on cattle delivered within a 300km radius around Dalby, Queensland, directly to feedlot weighbridges, with transactions comprising a minimum volume of either two decks or 52-head of cattle.
In comparison, the MLA Feeder Steer indicator tracks cattle purchased specifically by lotfeeders, incorporating both yearling steers weighing +200kg and grown steers weighing up to 600kg liveweight. The indicator uses a seven-day rolling average price drawn from saleyard transactions across Australia.
It captures cattle across all muscle classifications, ranging from very heavy to light, and all fat scores, ensuring comprehensive representation of the feeder steer market. Prices are reported in ¢/kg lwt, providing a reliable benchmark reflecting broad market trends for feeder cattle destined for grain-finishing operations.
MLA provide feeder steer prices on a national basis and prices for each Australian state, so comparisons can be made as to how closely aligned the respective state markets price movements have been.
Monthly price change in percentage terms can be compared between the Argus Feeder Steer Index and the MLA indicators to demonstrate how strong the correlation in price movements have been historically.
Measurement over time
The Pearson r-squared (R²) score measures how well two things move together over time. In this case, it tells us how closely the monthly percentage price changes of the Argus Feeder Steer Indicator match those of the MLA Feeder Steer Indicator.
If R² = 1, it means that every time the price of one indicator changes, the other changes in exactly the same way, meaning they are perfectly linked. If R² = 0, it means that their price changes have nothing to do with each other. If R² is between 0 and 1, it means there is some level of connection, but it may not be perfect.
For example, if the R² score between the two indicators is 0.8471 as shown above, it means that 84.7pc of the changes in the Argus indicator’s price can be explained by changes in the National Feeder Steer price.
This would indicate a strong relationship. However, if the R² score is 0.30, it means that their price changes don’t move together very consistently. In simple terms, a higher R² means the two indicators generally follow the same market trends, while a lower R² means these two markets behave more independently.
Given the manner in which the Argus Index is collected, it would be fair to assume that the QLD MLA Feeder Steer would also be relatively closely aligned when it comes to percentage price changes over a monthly horizon.
Indeed, this proves true. The QLD Feeder Steer correlation score sits at 80.7pc. However, somewhat surprisingly this isn’t the highest scoring state indicator.
As shown below, since the inception of the Argus Index in October 2021 the NSW Feeder Steer indicator has shown a stronger monthly price correlation of 81.5pc.
Moving further away geographically appears to impact the level of price correlation between the Argus index and the MLA state based indicators. The Victorian Feeder Steer indicator (image below) holds a correlation score of 65.2pc, while the South Australian Feeder Steer sits at 59.4pc.
If ever a correlation score was able to demonstrate how the Western Australian livestock markets are removed from the Eastern states it certainly holds true when assessing the WA Feeder Steer versus the Argus index.
As shown below, the WA Feeder Steer appears to have no price correlation present on a monthly basis with a score of just 1.5pc.
The table below provides a handy summary of the key findings of this analysis, demonstrating how closely aligned the state feeder steer markets are with the Argus Feeder Steer index, based upon monthly data from October 2021 to January 2025.
- Beef Central publishes its regular fortnightly feeder steer update on Monday.
Demonstrates that the WA market is rorted by too few processors and lot feeders, limited markets and the tyranny of distance. When the price differential gets large enough to warrant transport to the eastern states and those buyers arrive, the price increases to where trucking is uneconomic. Prior to the partial closure of the Suez canal in 2024 Israel was taking 10,000 cattle a month. In lieu of these markets, WA producers are operating at around break even, or less. Short term this might suit the rest of the industry, but is not sustainable. Without some fundamental change in the competition regime, resulting in price rises, it’s hard to imagine calf production not contracting.
This article proves Western Australian cow/calf producers and the states producers in general are being shafted.
Lack of processor competition, a lack of export grain fed market options, diminished live export demand (brought upon by government intervention in the sheep industry) and a reliance on the big two supermarkets provides little comfort to the sector. It is widely observed that if market conditions don’t significantly improve in six months there will be a mass exodus of cow/calf producers from the industry. The most likely scenario will be this farm land will be lost. long term, to the Pine plantation industry which is heavily backed by the state government. This potential fundamental land use shift will have severe implications for the future of the Western Australian industry into the future. As we have seen time and again governments, Labor in particular, have no about agriculture and what is required for regional prosperity and sustainability. Incentives for young people to enter the Western Australian beef industry are simply not there so the future is bleak unless the fundamentals change in the next six to twelve months.
Thanks for your feedback Mike. Unfortunately for WA producers there are several areas of ag policy that are not ideal. This analysis does reinforce how different the WA livestock markets are to their eastern equivalents. More needs to be done to support the WA sector with policy that is right for WA industry needs – 100% agree.
Great analysis Matt, be interested to see how the Auctions Plus Angus prices compare to these two indexes?
Thanks Mike. I also occasionally write for Auctions Plus – perhaps a good idea for a follow up item. Appreciate the idea.
Fantastic insights. Can someone answer me one simple question?
How can Ep3 able to provide such good insights for nothing Need more of these on beefcentral
Thanks Simone. Very kind words. EP3, like Beef Central, aim to support the sector with quality insights. But we do need the support of sponsors and clients to keep the lights on. Hopefully our peak bodies and farmer rep organisations see your comments and think to throw us a bone occasionally so we can keep providing items like this.