Killara feedlot manager delivers sobering assessment about feeder prices

Jon Condon, 16/11/2022

ELDERS Killara feedlot general manager Andrew Talbot started his address at Beef Central’s Primex field day seminar last week with a question: If the Eastern Young Cattle Indicator on Friday was 1019c/kg, where would it be in six months time?

The majority in the crowd chose a range between 900c and 1000c/kg, with a smaller number choosing less than 900c or less than 800c, and a few brave optimists, above 1000c.

Andrew Talbot addresses the Primex seminar at Casino

“The same thing happens when you put a bunch of clever economists in a room and ask them about interest rates. The variation will be dramatic,” Mr Talbot said.

“It’s no different in today’s discussion about beef and livestock prices, and where they are heading. Sometimes it is dangerous to know a little bit, or even too much, because you can confuse your bloody self,” he said.

Mr Talbot, along with beef processor Simon Stahl from Casino Food Group, and industry analyst Matt Dalgleish from Episode 3, stepped through some of the ‘headwinds and tailwinds’ they see affecting cattle and meat prices heading into 2023 during a Beef Central seminar at Primex Field days on Friday.

“Some of these things scare me a bit at night-time, but there are some real, sobering things that we need to know more about,” Mr Talbot told the audience.

“And I continue to go to MLA sessions where they paint such an unbelievably rosy picture, suggesting that we should never be concerned about beef cattle prices.

“Do I believe in that? No I don’t. For me, I’m where the rubber meets the road: I see the conditions first hand. Every week, I have negotiations with Coles, Woolworths, Kilcoy, Jack’s Creek and others, and I hear the pressure that these supply chains are under. I see supply chains closing down due to trading conditions.

“It’s live, it’s real – and yet at the same time I hear MLA and others say how good it is. That’s not the message I’m getting from feedlot customers,” Mr Talbot said.

Major market shifts

He made the point that major shifts in the cattle and beef markets tended to be triggered by things that the industry did not know.

“If somebody said to me, what is the single thing that is going to have the biggest effect on the beef industry in the next 12 months, I don’t think any of us yet know what that is.”

He said everybody in the seminar knew why the cattle market had gotten to where it did this year, after two years of drought and herd reduction.

“The industry is now rebuilding, and we have full market access around the world. There are so many reasons why the price of cattle went absolutely though the roof. And for the first part of that stage, that mirrored the demand for beef – there was enormous strength in beef demand, around the world.”

What lies ahead next year?

Mr Talbot prefaced his expectations for next year on the basis that Australia did not suffer an FMD or LSD disease outbreak. “If one or both of those diseases break out, then it’s a new world,” he said.

“It’s important to remember than 70pc of Australia’s beef has to be exported – unlike the US, we don’t have a large enough population to eat our way through any potential market access problem, in the event of a disease outbreak.”

Here are of few of the headwinds Mr Talbot sees:

Inflationary pressure in Australia was ‘sucking the average consumer’s wallets dry’. The average Australian beef consumer was not on $200,000 a year, but trying to survive on a quarter of that, he said.

“The average Australian is doing it tough: electricity bills are rising, interest rates, inflationary and cost of living pressure is there, and real.”

“MLA recently issued some figures suggesting their biggest fear was a reduction in demand for red meat, and what was that based on? Price.”

“Something like 60pc of the people who said they were thinking of eating less red meat said it was because it was too expensive. There are a lot of people who have moved more to chicken and pork for that reason, because beef has become extremely dear.”

Sometimes, beef had been its own worst enemy, because it had put the product into a price range where a lot of consumers had to start asking questions.

Mr Talbot asked the Primex audience who among them wanted to keep cattle prices at current levels, if it came at the long-term expense of the beef market.

“The question is, are current cattle prices sustainable? We could be hurting ourselves by the (cattle) price success we’ve had in the last two to three years, because it is clearly putting Australian meat in international circles at a price level well above our competitors.”

“The United States continues to dump meat in huge quantities at very cheap prices (see earlier story) on international markets like Japan, Korea and China, and Australia has lost market share.

China access

Full China market access would increasingly become important for Australia, Mr Talbot said.

“China is so much higher-priced for certain cuts than other markets. If we don’t get full access (a reference to Australia’s long list of suspended beef plants) into China by April next year, it is highly likely that we’re not going to get it back in at all,” he said.

“In April, it is expected that the shortness of beef supply out of the US will come to a head, as the huge herd reduction takes effect (see references below). If the politicians and bureaucrats in China don’t make a decision by then, Australian access is unlikely to improve.”

“China is the factor that really helped our Australian exporters over the past couple of years of very high livestock prices. Right now, exporters are distancing themselves quickly from China, because of the demand uncertainty in that market (see this earlier Beef Central report).

US drought impact, and other tailwinds

In terms of tailwinds, Mr Talbot said the Australian dollar, recently worth US64-65c, was certainly helping exporters. “But if the dollar went to US70c, I think we would see a lot more pressure going on.”

Killara’s Andrew Talbot

But the biggest tailwind factor for Australia next year would be the impacts of the US drought.

“Holy smokes – it’s really going to help us next year,” Mr Talbot said.

“But do I think that means our prices are going to lift in Australia? Absolutely not. But the US meat price might rise to our price, as a result of the cattle shortage that’s going to occur, which will put less pressure on our beef asking-price around the globe.”

“That has to be a positive for Australian producers.”

Australia had set up an enviable reputation in areas like traceability, anti-microbial stewardship and carbon, which was helping our ability to hold markets. But at the end of the day price still played a big part in beef trade.

“We might have the best environmental policy in the world, and best-practice for carbon and traceability systems, while the US has none of it. But customers will dump us because we are 5c or 10c/kg too dear. That’s the reality. And the US can get HGP beef into China, while we can’t.”

Lotfeeding business environment

Mr Talbot said his own Killara feedlot was perhaps a good barometer of the state of health in the feedlot sector this year.

Killara buys 70,000 cattle a year, delivering 70-day, 100-day, 150-day midfed, and 350 day Wagyu programs to customers like Coles, Woolworths, Jack’s Creek (Wagyu and Angus brand programs) and Kilcoy Global Goods.

Exploring each segment, he said the insatiable global demand for Wagyu beef was ‘repeatable, and strong.”

“We were selling Wagyu F1 carcases at about $12/kg carcase weight, and we’re now selling those same carcases at $16/kg,” he said. “The same customers are saying, please keep putting them on feed – it’s real, and it’s strong.”

He said the Angus job was different.

“Twelve months ago, we couldn’t put enough Angus on feed. Now, our Angus programs are hugely under pressure. Why? Because of the price points we are now at.”

“The grainfed industry has tried to absorb feeder prices of 630c/kg, and ration prices at nearly $400/tonne. What that means is that the price exiting the feedlot is around 1100c/kg carcase weight.

“That’s huge. Who’s making the money out of that? We certainly aren’t. The average margin we are making out of that is $30 a head. Our processors are telling us they are losing $300 a head, so who’s making the money?

“Producers and backgrounder are the links in the chain making a lot of money in the last two years.”

Making sums add up

Mr Talbot said the latest forward price offer he had seen for those grainfed cattle (currently costing 1100c/kg to produce), for delivery six months from now, was 900c/kg.

“That’s where the forward price is at. But where does that saving come from, for lotfeeders break even? It’s not going to come from grain. We all thought it was, but that was before the current crop weather impact. I really thought I would be buying cheap grain this harvest, but the world has changed. There’s not going to be any cheap grain.”

Lotfeeders were now resigned to having to live with grain prices around where they currently are, and the only place any relief was going to come from was cheaper feeder cattle prices.

“This is not about me (or lotfeeders in general) being difficult with producers – this is pure economics. That’s why feeder cattle prices have already shifted from 630c/kg six months ago to 520c/kg last week. And there’s more downside on that in the short-term, because feedlots need to deliver these cattle out, at about 880-900c/kg.”

For domestic heifers, the price got as high as 1080c/kg earlier, having paid 600-640c/kg for them as feeders.

“It was seriously dear. We are now picking up those same domestic heifers for 500c/kg, so there is very much a downward trend. But long-term trends for me aren’t that critical – this is about playing the shorter-term game – and in the short term, there is downward pressure on the feeder market.

But the world would start to change when April rolls around next year, Mr Talbot predicted, when US cattle supply declines due to drought impact and price between US and Australian beef starts to equalise more in global markets.

“Personally, I think there is a bit of pain still to be had in the next six months. Restockers, which are reflected through the EYCI, must come back in price. If they don’t, it will affect backgrounding of trade steers.

“I would put it to all breeders in this room: do you need $2500-$2600 (the recent price of a heavy feeder) to survive, or are you still going to do alright at $1800-$2100?”

“If I said this to you three years ago, you would have taken $1800 or $1900 a head every day, and said that’s fantastic money. But the success we’ve had in the last two years could really come back to hurt us. We must get some common sense back into the equation.”

“MLA will probably hate me for the discussion we’ve just had, but what I’m trying to do – as sobering as it is – is to put some balance back into this debate. If we don’t, it will hurt our market, long-term.”

Angus strategy

Mr Talbot’s advice to Angus feeder cattle breeders was that if they were going to be in the midfed Angus job, the best strategy was to focus on the high end, aiming for marbling scores of 4+.

“Marbling scores of 4+ are equivalent in international markets to USDA Prime, and there is big premiums available for US Prime – as there is for us for marbling score 4+,” he said.

“We access one grid which currently offers 60c/kg more for Angus carcases grading marbling score 4 or higher.”

Mr Talbot noted the significant 140,000 head decline in cattle numbers on feed reported in the September quarter (click here to view earlier story).

He said the amount of grainfed beef production in Australia (not just cattle numbers slaughtered) was now above 50 percent of all beef, and in the US, above 70pc.

“It’s not about whether we have a philosophical view of whether grainfed beef is better than grassfed, or the reverse – this is about production facilities to feed the billions of people around the world,” he said.

He said Australian feedlots were largely established in the 1970s to take seasonal variation out of the play.

“While we’re heading into our third good year in a row, Australia is still more characterised by droughts as a continent, than good seasons. Without feedlots, we would never get the consistency of product that customers around the world demand.”


Tomorrow: Fellow Primex seminar speakers, processor Simon Stahl and industry analyst Matt Dalgleish stare into their crystal ball over cattle prices and meat demand next year .

Click here to view a summary of Friday’s carbon seminar discussion at Primex.





Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.


  1. Andrew Street, 18/11/2022

    Well written and in my view it’s the old “high prices are the cure for high prices” and vice versa.

    With regard to marbling do you see the feedlot industry generally rewarding the producers of marbling score of +4 steers? I believe there is one feedlot in northern nsw. I am no doubt wrong but it appears to me that feedlots take the risk when they buy cattle and use the +4 marble carcasses as a the upside margin.

    • Andrew Talbot, 19/11/2022

      Thanks Andrew,
      Currently feedlots like Killara pay premiums to suppliers who have previous records of delivering 25% plus 4sc and better. Only problem is that the feedlot wears the risk that they don’t marble. That’s why supplier data is so important. Regards

  2. robert forbes, 17/11/2022

    Very well spoken Andrew, puts a lot of things into perspective. You will have given a lot of people another side to look at side and hopefully prepares them to become more aware of what can or may happen.

    • Andrew Talbot, 17/11/2022

      Thanks Robert. Giving people an honest assessment of state of play and allowing them to make there own conclusion is always important …no more than at the moment.

Get Beef Central's news headlines emailed to you -