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Chris Howie’s livestock market wrap – September 2020: Setting up for a successful sale

Chris Howie, Stockco, October 1, 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.

 

 

 

 

 

MOST stud breeders routinely contact all their bull buyers to find out how the sires purchased at last year’s sale performed. This is part of their normal business, yet when we look over the fence at commercial cattle operations, only a very small percentage of producers take the time to follow-up with those that buy their sale stock.

How many producers out there have called last year’s buyers of their females to see how they performed? Whether you are a breeder or a trader, creating a positive outcome for those that buy your stock is investing in your next sale.

Being interested in how your livestock performed works both ways. It helps you improve and is the start of a relationship and brand-awareness specific to your operation – thus creating more inquiry leading to more demand, which immediately flows on to price.

As an auctioneer, just hoping the crowd will show up and start bidding can very quickly lead to a difficult start to a sale, even when the prices are good. If we go back 20 years, the meat buyers often supplied the floor for the feature sales because the price difference was not as great. However, with the current female prices, a sale is totally reliant on restocker and breeder orders operating.

The pricing spread across the feature ewe sales in SA, NSW and Victoria highlighted the importance of doing your homework and engaging with potential buyers.

Whether saleyard, electronic platform or both, creating interest from potential buyers was continually driven into us as young agents. A sale is nothing without buyers and it was always important to secure some buying orders to underpin the start of any sale. Making phone calls is the only way… emails and texts are good to confirm, but rarely drive activity.

Often one phone call can turn into several leads and provide orders that can be used to set the sale up from the first pen.

If you are a potential buyer and unable to attend a sale because of time, distance or COVID, find someone who can put your order in their pocket just in case an opportunity appears at your level. Mobile phones allow face-timing a pen before the sale to give you an excellent description of the stock.

At these prices, having your credit arrangements in place prior to purchasing is a must. Always confirm what you want in an email covering off the basics – breed, bloodline, age, pregnancy status, maximum price etc.

It’s not hard to be on the phone for the first couple of pens to get a feel for prices. The cost saving alone on one load of ewes because the sale $30 softer than the day before equals $18,000.

A great example of doing your homework was the Tattykeel Australian White sale held on Wednesday.

Cattle

The store cattle market took another step-up during September. Quality cows and calves were consistently ranging from $2000 – $3400. PTIC heifers are making $1800 – $2300, plenty of light heifers are making $5.50 – $6.50/kg and slaughter cows around $5.80 dressed.

I am a believer that a female will give you the opportunity to breed your way out of the initial purchase price, even if there is a check in the market or feed situation.

It seems the steer prices being set are based on ‘one more bid’, not what the potential sale is at the other end

However the current steer market seems to be driven entirely by availability of grass. I saw 174kg Angus cross calves make $1100 last week and baby bullocks at Naracoorte and Mt Gambier being bought to feedlot for $3.98 – $4.10/kg early September. A great outcome for the vendor and light cattle always deliver the upside of continued weight gain.

I do suggest caution, though, as it seems the steer prices being set are based on “one more bid” not what the potential sale is at the other end. Earlier this year when it was dry, I was a strong advocate of putting light cattle away. Now with prices getting up there I would be looking at buying cattle with weight to reduce the time you need to keep them and securing a forward price for the sale period.

Pat Cleary, ECM, Moss Vale. With current high store prices Pat is a great believer in taking some form of forward supply contract. It may not be the best price but at least you have certainty on the sale outcome. Plenty of Hay and silage going down in Pat’s area with shed and bunks being filled. The season is very good but prices are just starting to put a break on buying demand.

Can prices go higher? Expectation of early rain in Queensland and NT is already seeing inquiry for any females increase. The Flood and Drought recovery scheme has been extended for those affected in FNQ which will see many re-enter the market to restock. I don’t know if store prices can go higher, but it will have an impact on supply to processors and exporters and see cattle heading north again in the next couple of months.

Dairy heifers are achieving $2100 for live export and this market may become squeezed on supply with NZ putting live export on hold whilst the inquiry into the lost vessel takes place. Some of those orders will need to be filled out of Australia.

Had a chat with Nigel Gosse the new CEO of Farmgate auctions. The platform is heading towards its first birthday with an Anniversary sale Friday 9 October at 8am.

The sale Farmgate ran early September created considerable interest with 968 PTIC heifers and mixed sex weaners offered. Considering Farmgate is still in its infancy, the registrations and activity were very good with 110 buyers online & 100pc clearance. Sale duration was 42 minutes with cattle going to Berrima, Wangaratta, Narrabri and Guyra. Angus steers topped at 629.78c with their sisters beating them at 644.84c. A strong livestock industry is always about providing options, and another player never hurts.

Sheep

Prices reported for best ewes are always the headline, however several sales have not reached the expected highs. September saw the best Merino ewes of similar quality ranged from $260 – $374. Demand was there with most sales interfaced electronically. So what caused the difference in price between the centres?  $10 – $20 for a normal market fluctuation, $10 freight differential, $10 for a repeat buyer on specific lines.

Even with the freight component the price variance on very similar ewes between saleyards was as much as $50-$60 in some instances. In turn, this provided a real opportunity to buy some excellent ewes online or through an agent attending if a couple of phone calls had been made before the sale started.

Perhaps the success of some sales created the expectation buyers would just appear. Often the price setters come from well outside of the geographic area the livestock are from and a call prompts them to operate.

Lambs

I will preface this month’s lamb comment by saying we are seeing a price spike this week that may be short-lived, but is a great opportunity if you are quick..

My comments in last month’s article about Create More Weight utilising the positive feed situation for your lambs seems to have paid off faster than expected. Those that cash-flowed their lambs to meet financial commitments are now set to capture the benefit of a weight and price improvement with minimal cost.

Continued rain, lambs forward contracted and good feed have reduced numbers being offered. The announcement of increased works capacity with the easing of the Victorian COVID rules has had a direct impact on price offers also. A result is rates appearing at $7.20 – $7.30 with lighter types in the sale yards pushing $8.

If lambs were 21kg dressed at the start of September, on good feed by now they should be roughly 24.3kg dressed. At $7/kg that’s approximately $23.10 extra on weight gain plus the $1/kg on the original lamb carcase of $21. Just over a $44 return – not bad.

Nigel Starick Livestock Manager at Elders Bendigo said Bendigo yarded 8000 lambs and his first run on Monday averaged an estimated 32-34kg dressed, and were the best seen for 18 months.

The activity on heavy lambs was very good although this may have been driven by the short supply. Supermarket activity continues to pay well with the right article consistently at $170-$180 over the last couple of weeks and now reaching $200.

The first of the big southern store orders also entered the market competing directly on heavy second cross lambs, he said.

Once we get some sun and heat the numbers will start to flow again which may well put a lid on further price lifts. Rarely do the big sale centres Dubbo, Forbes, Wagga, Bendigo, Ballarat, Hamilton and Naracoorte all fire together, but the season is starting to line up that way. With the rain continuing, November is starting to look like the big numbers month so taking some forward pricing maybe prudent if that is your target time.

Russell Hiscox from Clemson Hiscox & Co at Walgett gave me a quick report. Russel commented that many producers are treading water on livestock purchases until the harvest comes in. Rainfall of 20-30mm last week was a godsend and although the season is not as big as 2016, this rain whilst crops were flowering should reduce the amount of pinched grain and deliver above average yields.

A big positive coming out of the drought has been the preparation of ewes for lambing. Russell said the traditional expectation was 80-85pc at marking. However working with his clients and using livestock production advice to prepare ewes prior to joining has produced autumn lambing percentages consistently between 110 and 140pc. Many of the flocks are Dohne-based with April/May drop lambs already 44-47kg liveweight. Quite a number of producers are already planning supplementary feeding of ewes in preparation for joining on the back of these results.

Flies

With BoM indications of a wet spring and summer get your sheep treated before harvest and save yourself a lot of extra work.

This small investment in time and product now can save you a lot of time and money mid harvest. Some of us may have forgotten the issues of wet summer fly strike because it has been dry for so long. A great website called Fly Boss  lets you calculate your high risk time specific to your area. It also provides product information and effectiveness.

Some of the new products provide protection over an extended period and reduce fly numbers at the end of the season.

Lost art

All the work was put into the sale set up, yet the most important part – The result is often neglected or left until days later when it is of little value other than looking to see if your picture is in the paper.

During the January calf sales, real time market reports are extremely important, irrespective of the sale agent. Andrew Hosken, Tamworth and I found great value in putting a report together within an hour of the sale finish and distributing it to those within our potential buying network. In nearly every instance this would create orders for additional loads of cattle for the following day’s sale.

I watch some agencies do this very well, ECM Livestock at Moss Vale principals Pat Cleary and Dhugald McDowall were very early adopters of telephone video technology to deliver real time reporting consistently ECM Livestock market reports.

Market reporting needs to be religiously done every sale. Not only does it provide a sound source of information, but it creates a trust component that helps develop buying relationships. For younger agents it helps with public speaking, written reporting and personal brand. If attending a sale, there is no reason a sale report can not be distributed amongst your clients even if not run by your company.

Agricultural Real Estate really humming

I spoke to Michael Stewart MD, Charles Stewart and Co in Victoria. “Seasonally the Western districts are looking at a spring to spring feed situation. Overall the agricultural scene is very positive in Victoria with demand for properties outstripping supply.” Michael said “some maybe surprised at the value of their enterprise if they obtained an appraisal. Especially as it can be quickly linked to inquiry for specific styles of properties,” he said.

“The COVID restrictions have created a need for Victorians to adapt however it seems most in rural Vic have taken this in their stride and remain positive. Lambs are doing exceptionally well and the coming calf sales are set to present with some outstanding weight and quality.”

Finding agricultural workers

Greg Densley and I worked together over a number of years. He is now a Talent manager for Agribusiness recruitment based in SA. Greg says the good management roles are filling quite quickly. The remote and relocation jobs are not as easy to fill yet are offering some great opportunities for those looking to advance within the agricultural sector. The WA example of training airline pilots to drive state-of-the-art harvesters is a great example of looking outside the box and having a go.

Opportunities

  • Heavier cattle aligned to a forward price
  • Grabbing price spike opportunity on lambs
  • Joining old ewes
  • Join trading heifers
  • Cashflow and Create more Weight
  • Treat for flies early
  • Vaccinate for pulpy kidney.

 

 

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Comments

  1. Doc Cunningham, October 2, 2020

    Enjoyed your article Chris, a lot of research and common sense in what your saying.

  2. Tom Redden, October 1, 2020

    Great article Chris. Enjoy reading your market comments when published. Thorough analysis goes into the report and always an interesting read.

    • Chris Howie, October 6, 2020

      Thanks Tom. learning from the Gawler agents , both companies, they can take a lot of the credit I think..

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