THE Australian feedlot sector has grown enormously over the past decade, and with that has come a much heavier challenge in sourcing suitable feeder cattle.

Numbers on feed hit another record at 1.424 million head in the September quarter, representing a rise of more than 300,000 head or 27 percent over the past five years.

So from where are lotfeeders sourcing their cattle, in ever greater numbers? To what extent do they rely on the auction system (saleyards plus AuctionsPlus) for feeder procurement?

Beef Central has pulled some readily-available data together to try to find some answers.

Identifying numbers sourced out of the auction system is relatively easy. Both NLRS and AuctionsPlus identify feedlot buyers as a category.

For the calendar year to date (one week to go), AuctionsPlus has transacted 44,265 head of feeder-type steers and heifers to feedlot buyers. That includes some backgrounder weights as well as feedlot-ready cattle, from weight categories 330-400kg and +400kg.

For the 36 NLRS-reported saleyards, calendar 2024 year-to-date has turnover for steers and heifers +330kg bought by feedlot buyers at 564,933 head. Combine physical and online sales and it delivers a total of 609,198 head for the year. For lighter cattle bought by backgrounders before later sale to a feedlot, we’ve considered that to be a paddock sale.

In trying to determine overall annual feeder cattle demand by the grainfed industry, we’ve made a few assumptions, using a few known metrics.

As of 30 September, there were 1.424 million head of cattle on feed across Australia.

Average days on feed has grown substantially over the past ten years, for a number of reasons:

• The most obvious factor is the encroachment of Wagyu. Longfed Wagyu are on feed anywhere from 350 to 500 days, depending on breed content. One widely-used estimate is that there are around 250,000 Wagyu and Wagyu cross cattle currently on feed, representing 18pc of the national total population on feed. Fullbloods only make up about 15pc of that, but they are typically fed 450-500 days, while F1s are fed 350-400 days.
• Even shortfed (non Wagyu) cattle are fed longer than they used to be. Plenty of ‘100-day grainfed’ cattle are now fed 120-130 days, to optimise marbling, and the ‘midfed’ category (150-180 days) that largely disappeared some years ago is now back in greater favour again.
• Additional numbers of cattle being fed in recent years has come primarily at the export end (+100 days), with domestic 60-70 feeding for the likes of Coles and Woolworths relatively stable.

Average time on feed

Based on those assumptions, using a cattle/days formula, we’ve arrived at an average time on feed in the Australian grainfed industry presently of 157 days. That number may look a little too high to some readers – and we agree – so we’ve also applied a second, lower, more conservative average days on feed figure of 130 days, for the sake of the exercise.

If we accept the higher ADoF figure of 157 days, it means an annual feeder cattle turnover, based on current occupancy of 1.424 million head, of 2.3 cattle cycles a year, or 3.275 million head.

If we choose the lower ADoF figure of 130 days, it means an annual feeder cattle turnover based on  current occupancy of 2.8 cattle cycles a year, or a requirement of just short of four million feeder cattle.

Based on the numbers discussed above on feeder cattle purchased via the auction channels (physical saleyards plus AuctionsPlus) it suggests that the combined auction channels only account for 18.6pc of all feeder cattle purchases made each year, when the higher average figure of 157 days on feed is applied.

When the lower figure of 130 average days on feed is applied, the reliance on saleyards/AuctionsPlus falls even further, to just 15.2pc.

Set out below are a few considerations to put these assumptions into better context.

It’s well known that among the largest lotfeeders in Australia (see Beef Central’s earlier Top 25 Lotfeeders report) some companies have a policy of avoiding saleyards cattle, wherever possible. Others use a formula where 3-7pc or 5-10pc of purchases made out of the yards, with some seasonal and supply  variance.

Obviously, there are some feeder categories – like Wagyu, for example – where virtually no cattle are bought by lotfeeders out of either the saleyard or AuctionsPlus channels. There are also an unknown number of feeder cattle that are bred internally in large integrated grainfed beef supply chains, that are neither paddock-bought nor saleyards derived. AA Co and NAPCo are examples.

It’s impossible to break down the reliance on auction selling to a regional basis, because of the common migration of feeder cattle from one state to another. There is also considerable seasonal variation in buying patterns, especially in southern states, which is beyond the scope of this report to capture.

One of the most obvious reasons why lotfeeders favour direct consignment over saleyards is animal health impacts. Saleyards-bought cattle exposed to co-mingling and other stressors statistically perform worse that cattle procured straight out of the paddock for respiratory disease and other issues.

One large feedlot operator this morning suggested his business needed to buy saleyards cattle at least 10c/kg liveweight cheaper than direct consignment, to offset growth and animal health performance differences.

• Beef Central plans to carry out a similar calculation on the extent of direct consignment versus auction procurement on slaughter cattle early in the new year

Feeder cattle market reporting

The above exercise prompts some discussion around the industry’s ability to accurately report feeder cattle pricing.

Despite the heavy dominance of paddock-bought cattle to service the feedlot industry’s requirements, almost all of the industry’s market reporting efforts focus on the saleyards/auction channel.

Meat & Livestock Australia’s National Livestock Reporting Service some years ago withdrew its paddock feeder cattle price reporting, citing inconsistent access to quotes. A number of other ‘non-saleyard’ cattle market indicators were removed around the same time.

To help offset this, Beef Central publishes a fortnightly free-access feeder cattle update (click here to access latest instalment) based on paddock quotes on feeders across the country. The contributors to these quotes account for almost a third of all cattle on feed in Australia.

Additionally, Beef Central produces an occasional update on Wagyu feeder prices from F1s to Fullbloods, based on paddock sales.

For feeder price reporting, NLRS now relies on the National Feeder Steer Indicator, a seven-day rolling average of steers sold through NLRS-reported saleyards across Australia. The indicator is expressed in c/kg liveweight, rounded to two decimal points. It includes yearling and grown steers with muscle scores A-E, fat scores 1-5 and liveweights up to 600kg.

Today’s NLRS feeder steer indicator, for example, sits at 361.72c/kg, with 7985 head of eligible cattle (see criteria at base of page) sold in NLRS saleyards over the past seven days. Just four yards – Roma and Dalby (Qld), plus Wagga and Gunnedah (NSW) provide 56pc of today’s indicator’s value.

The purpose of the National Feeder Steer Indicator

MLA says the purpose of the National Feeder Steer Indicator is to describe what feedlots are paying for cattle out of the saleyard. It says the indicator is designed to be applicable to a wide range of beef industry participants across the supply chain.

Since 2015, the indicator is made up predominately of yearling steers (85pc), with the remainder being grown steers. The composition varies over time to a degree as the indicator is influenced by seasonal factors and grain prices that are a major input for lotfeeders.

NLRS said it was important to note that price movements in individual saleyards and livestock categories are likely to be much more volatile than the National Feeder Steer Indicator, while still subject to the same underlying price trends.