Source: MLA

BIG price differences between lighter feeder steers and heifers this year have motivated a large swing towards feeding heifers for Coles and Woolworths supermarket supply.

It’s not that uncommon for heifers to outnumber steers a little in supermarket programs, but some yards in both NSW and Queensland holding domestic contacts are currently feeding nothing but females, they told Beef Central last week. The trend appears to be a little more evident in Queensland, but is being seen at least as far south as Central NSW.

The graph published above, produced by MLA analyst Erin Lukey at our request, shows the wide price gap that’s opened up between feeder steers and heifers over the past 12 months (see today’s separate item on MLA’s new feeder heifer indicator, launched today.)

Neither Coles nor Woolworths were prepared to talk on the record, but one processor who does a service kill for a major chain said once the feeder price gap got to 25-30c/kg liveweight, the domestic grainfed heifer case ‘could get pretty compelling.’

A domestic supply chain manager said the real lift in the 100-day steer price, combined with the good season in the north, meant more steers were going out to heavier export weights, leaving a bigger void for heifers to fill in shorter domestic programs.

“There’s also a bigger proportion of people leaving those colour steers on grass to grow out to heavier weight,” he said.

“All this is certainly connected to export beef demand. If beef demand is strong overseas, as it currently is, and the seasons allow owners to background steers out to heavier starting weights, it’s almost inevitable that there will be a larger proportion of heifers on feed for 60-70 day MSA type programs.”

Another factor was that restocker demand for heifers has dropped off a lot.

“It’s been possible to buy bigger runs of heifers, but as soon as you run into that restocker demand, it’s actually a better option to include steers in the mix,” he said.

Historically, there has been a 10c/kg carcase weight difference between steer and heifer on supermarket direct consignment grids. But in more recent times, that has become less rigid – ranging from up to 20c to ‘virtually zero’ when demand is high. Currently, the figure is around the mid-point on that scale, one supply chain manager said.

List of downsides in feeding heifers for supermarkets

A feedlot nutritionist and veterinarian said he was seeing signs of the strong emphasis on heifers among his clients feeding for supermarkets at present.

While there were some downsides in using heifers over steers (lower growth rate and lower ultimate carcase weight, tendency to get over-fat, lower carcase boning room yield, lower MSA eating quality index result (weight-for-age related), lower c/kg return on the supermarket grid, risk of pregnancy), considerably cheaper prices for heifers going onto feed had more than offset any of that, this year.

If a heifer averaged (for example) 1.6kg/day gain and a steer 1.8kg/day, cost-of-gain relative to ration price also came into the equation. Nutritionists sometimes get involved in the decisions over purchasing heifer over steer for supply contracts.

“On top of this, there is more competition for their steer brothers, to go into 100-day export programs,” the feedlot consultant said. “Strong international beef demand, especially for grainfed, is driving that. Some operators are less inclined to direct a feeder steer into a domestic program, if he can be fed-on for a longer export program,” he said.

The use (or non-use) of HGP for supermarket programs was also a factor, he said.

“Without an implant, some heifers (dependent on breed type) can be a struggle (fat-wise), even when fed only 60-70 days.”

While for Woolworths programs, fed heifers would be receiving a non-TBA-based implant, Coles no-HGP policy meant implants cannot be used to help manage fatness risk.

Preferred heifers for domestic feeding had a little more growth ability, typically crossbreds with British/Euro influence, or a splash of indicus, he said.

“Just the nature of the heifer – she is designed for breeding, after all – will start to deposit fat at much lighter liveweight than a steer. That means the lotfeeder actually has to get her a frame score higher than an equivalent steer to counter that early fat deposition risk.”

“The lotfeeder often ends up having to target a lighter carcase weight, or they will get penalised on fat depth.”

Most supermarket contract grids accept steers and heifers from around 240kg to 300kg carcase weight.

Current grid prices for August delivery supermarket steers are around 800c/kg, Beef Central was told, with Coles a little higher than Woolworths, because of the HGP factor.

‘Reject breeders’

The feedlot nutritionist said, however, that it had to be remembered that heifers being fed for supermarket beef in Australia were effectively ‘reject breeders.’

“Something is wrong with them, straight up, otherwise they would be in a breeder paddock somewhere,” he said. “It partially explains the price difference from steers. Either they are small-framed, structurally not quite right or show temperament issues. So effectively, you are dealing with the rejects, to begin with.”

With price differentials between light feeder weight steers and heifers now narrowing from what it was, the window encouraging some contract holders to strongly preference heifers may now be closing.

“One you add up all the negatives with heifers, unless there is a substantial purchase price gap, most domestic supply chains would obviously prefer steers. And beyond all those other factors, there is pregnancy risk, and no feedlot want to have to manage pregnants.”

More heifers also directed into export programs?

Another trend in heifer feeding is in more heifers of the right type being fed-on to supply export 100-day programs.

While the overwhelming majority of cattle fed for +100-day and longer programs are steer, there is technically no reason when heifers cannot be used for such programs. They can be marketed under the descriptors GFYG (Grainfed Young Beef, up to two-teeth) or GHYP (Grainfed Young Prime Beef, up to four-teeth). Again, finding the right heifers that do not become over-fat is the challenge to hit the optimum +300kg carcase weight. Bigger-framed and/or older heifers of the right breed type are chosen.

One grainfed consultant who works across a wide range of yards said the number of heifers being fed for export programs had probably doubled over the past 12 months, in response to strong overseas beef demand.

“I think you’d find there are a lot more black (Angus) heifers being directed into 100-day Angus brand programs, than what’s been seen in the past,” another supply chain manager said.

“With the favourable seasons further north, you can add weight to that heifer before feedlot entry to allow her to handle those extra days on feed.”

• Click here to read about MLA’s new feeder heifer indicator, being launched today.