Markets

Premiums for Qld grainfed over grassfed slaughter cattle narrow to 5/kg or less

Beef Central, 25/09/2015

AS quality grassfed slaughter cattle become increasingly difficult to source in Queensland, the premium of grainfed cattle over grassfed has been eroded, Meat & Livestock Australia points out this week.

While both the grassfed and grainfed Queensland over-the-hook indicators have shown strong growth in recent weeks, as illustrated in the graph below, grassfed price rises have outstripped those of grainfed, in relative terms.

In fact, a number of southeast Queensland processor grids now have little (5¢/kg carcase weight) to no premiums for grainfed cattle over equivalent grassfed lines.

Across Queensland this week:

  • Heavy grassfed yearling steers averaged 557¢/kg, up 13¢/kg
  • Heavy 100 day grain-fed steers averaged 563¢/kg, up 9¢/kg
  • Heavy MSA grass-fed yearling steers averaged 583¢/kg, up 13¢/kg
  • Heavy MSA 100 day grain-fed steers averaged 585¢/kg, up 13¢/kg

All prices quoted above are for steers 300-320kg, 0-2 tooth, A-C muscle score.

However, it is important to note that while the top grassfed over-the-hook indicator is close to the equivalent grainfed indicator, very few grassfed cattle would be able to meet this specification.

GF Graph 1

 

 

 

 

 

 

 

 

 

 

The graph above illustrates the strong increase in the Queensland grassfed trade steer indicator (240-260kg, 0-2, tooth, A-C muscle) and the 100-day grainfed steer indicator (300-320kg, 0-2, tooth, A-C muscle) so far this year. The second graph below illustrates the difference between the two price series.

The last time the grainfed premium was as narrow as it is now was in 2011-12, when low grain prices eased the pressure on grainfed cattle prices and favourable seasonal conditions saw grassfed cattle slaughter slow, lifting prices.

GF graph 2

 

 

 

 

 

 

 

 

 

 

It is not surprising that the premium for grainfed cattle has been eroded, MLA says.

According to the Queensland Government Science Delivery Division of the Department of Science, Information Technology and Innovation, the majority of Queensland, in particular the central and western regions, has had below-average to extremely-low pasture growth over the past six months, making it increasingly difficult to find cattle in good condition off grass.

Meanwhile, grainfed cattle supplies have been at record levels this year, with the ALFA/MLA June quarter feedlot survey indicating there were close to 957,000 head in Australian feedlots.

 

The NLRS OTH indicators are calculated as a slaughter-weighted average of processor grids. Prices are collected from processors which represent the majority of cattle killed in each state. Prices do vary within categories and the OTH indicators do not represent all discounts of cattle failing to meet processor specifications. Hence, quoted OTH prices should be viewed as indicators and individual vendor prices received may vary.

 

Source: MLA

 

 

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