Markets

Tighter AuctionsPlus year for cattle turnover, but improved for sheep

Jon Condon, 20/03/2014

 

NOT surprisingly, the AuctionsPlus online livestock marketing platform recorded a reduced turnover for cattle last year, while sheep numbers produced a solid gain.

AuctionsPlus has a reputation for being most popular on a rising or solid cattle market, while listing support tends to dry-up during declining or poor market conditions.

While the AuctionsPlus business trades on a July-June cycle, last calendar year, cattle turnover was down about 25 percent on the previous year to a little under 200,000 head, general manager Gary Dick told Beef Central yesterday. The best years earlier have seen around 250,000 head sold through the online platform.

In contrast, sheep numbers for the period July 2013 to date are up close to 500,000 head on the same period the year before, at close to two million head. Some months have been up 50,000-60,000 on year earlier figures.

“Even when it was dry, our sheep clearances and prices have been excellent. Obviously there’s a strong demand out thee for good ewes,” Mr Dick said.

OJD factor in trading

An interesting point to note has been the strong demand for Queensland-bred sheep recently, shifting into southern states because of Ovine Johnes Disease (OJD) management issues.

When the season broke in South Australia, for example, local woolgrowers could not buy sheep in Victoria of NSW because of OJD rule changes, making Queensland sheep suddenly popular for restocking.

Mr Dick estimated the ‘OJD factor’ premium at between $10 to $15 a head for Queensland sheep, excluding freight, which was probably worth another $10-$15 a head.

“It’s a trend that AuctionsPlus has been able to capitalise on, bringing widely separated buyers and vendors like this together, online,” he said.

For store cattle, seasonal conditions last year conspired against high throughput on AuctionsPlus. The circumstances across Eastern Australia could hardly have been worse for attracting vendors to list lines of cattle last year, especially during the latter half.

“There was a sense of urgency on many vendors’ marketing decisions, due to deterioration of the season, and the online facility is not ideal to such circumstances,” Mr Dick said.

“By the time an accredited assessor does the assessment, catalogue information is uploaded on a Wednesday, stock are sold on a Friday, and perhaps seven days for delivery, it adds a lag-factor that ‘forced’ vendors often have not been able to accommodate. In many cases, once the decision to sell was made, they’ve wanted them gone that same week,” he said.

Once more orderly marketing does return, following widespread decent rain, AuctionsPlus can be expected to come back into its own. History has clearly shown that when the cattle market is on the rise and saleyards numbers are in decline, AuctionsPlus turnover goes up.

A brief glimpse of that was seen after recent rain across some areas of western Queensland and NSW, when saleyards numbers fell away briefly, while AuctionsPlus catalogues started to grow. Unfortunately the weather impact was only short-lived.

 

Momentum grows in WA

There have been some encouraging developments for the platform at a regional level recently, however.

Western Australia has not been a strong area for AuctionsPlus support historically, but a recent Esperance sale produced a very strong result. The offering of 800 local cattle sold very strongly, with some phenomenal cow prices achieved. Heavy Angus slaughter cows averaging 300kg sold on-farm to 324c/kg. Located at Boyupbrook, they still had a fair freight cost on them to slaughter. Angus cows PTIC averaging 750kg sold as replacements sold from $1015 to $1130. The result was probably a record for WA for cows on AuctionsPlus, and possiblty through all selling channels.

In WA, AuctionsPlus has been basically dependent on one private agent who sells about 7000 head of cattle a year on the platform, but support from miner, ALCOA’s cattle operations and other vendors has seen volume build up recently. ALCOA alone is contributing around 3000 head per year.

 

‘Bid the Grid’ was pre-dated by ambitious LMAQ project

In the interests of historical accuracy, Beef Central has learned that there was, in fact, a much earlier attempt at a grid-based electronic slaughter cattle marketing platform, pioneered in the mid-1980s.

Ken Wilcock, a former research officer with the Livestock and Meat Authority of Queensland, has pointed out that the LMAQ started developing a somewhat similar model to ‘Bid the Grid’ (featured on Beef Central in this article yesterday), back in 1982.

Producer assessment, processors loading their own 'price relativities', and calculation of 'bid factors' discussed in yesterday’s ‘Bid the Grid’ article were all directly pioneered in the early Queensland Electronic Stock Trading (Quest) model, Ken suggested.

“Full marks to Landmark and Brendan Wade for giving the concept another try, though,” he said.

Ken was recruited to the Queensland Livestock and Meat Authority in mid-1982 to develop the QUEST initiative.

“A lot of work went into developing the concept of tying processors' own price grids into an auction framework, and out of this came the 'price relativity' and 'bid factor' terminology,” he said.

Responsibility for developing the concept as a fully-interactive, real-time computer application fell to a company called Computer Sciences of Australia.

The concept was trialled in a series of eight sales in 1984/85 where 3491 cattle were offered, Ken said. Somewhat coincidentally, it was John Thrupp from Dalgety (Landmark's predecessor) who acted as sale co-ordinator.

A total of 37 vendors, 21 abattoirs, 14 branch offices of the major stock agencies and six private agents took part in the trials, but they went no further.

The Australian Meat and Livestock Corporation at the time asked QLMA not to proceed with QUEST as a stand-alone initiative, in the interest of seeing CALM developed as a national system.

“The QUEST concept was initially included as one of the sale options in CALM, in deference to QLMA agreeing to AMLC’s request, but there was no (internal) support for it,” Ken said.

“The CALM proponents were strong supporters of the NELCM (professional assessor-based) concept developed by ABRI at University of New England, so there was strong resistance to the idea of producer assessments,” he said.

“As far as I know, the price-grid option attracted little interest within the CALM management network, and was eventually dropped as a sale option. Whether it was modified into some kind of generic or public grid format during that time I do not know.”

A lot had happened since, particularly in the area of electronic communications and digital photography, he said.

“CALM has had good success with sheep and lambs and store cattle and agents now accept the 'box' as part of the marketing landscape. Hopefully that will count for something this time around. For old times’ sake and in recognition of the efforts of all those who assisted the original project in some way, I would love to see Bid the Grid succeed,” he said.

 

  • Editor’s note: The Queensland Livestock and Meat Authority was, in many ways, an extraordinary organisation rivalling AMLC, MRC and Ausmeat in its influence over meat and livestock R&D, market reporting, and cattle marketing systems. On behalf of the Queensland Government, the body also controlled six large public abattoirs stretching along the Queensland coast from Brisbane to Townsville. There was considerable rivalry, if not jealousy, from AMLC/AusMeat/MRC ranks towards QLMA for both its achievements and its prominence in industry circles. In an era when cattle market reporting was state-based, QLMA’s electronic system in Queensland was streets ahead of anything else operating in Australia at the time, and pioneered a host of innovations still evident in market reporting today. A host of industry stakeholders who have since gone on to prominence in other fields broke their teeth working for the QLMA in its earlier years.    

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