Supermarket grainfed contract cattle break through historic 1000c/kg milestone

Jon Condon, 10/02/2022


THE relentless rise in feeder cattle prices over the past 12 months has pushed forward contract prices on Coles and Woolworths domestic slaughter cattle well north of 1000c carcase weight in recent weeks, making them arguably the most expensive cattle in Australia, barring Wagyu.

For May delivery, Beef Central understands that Woolworths is currently paying contract-holders around 1005-1010c/kg carcase weight for typical 70-day steers, and Coles, around 1030c/kg for HGP-free, vendor-bred cattle, depending on location.

Both are all-time records, and continue a gradual appreciation over the past year, rising at least a dollar a kilo on this time back in 2021. Both contract prices are higher than other premium beef categories currently, including Certified Organic, EU and Certified Grassfed.

The dramatic rise reflects just one thing: the extraordinary price level that feeder cattle are currently enjoying.

The market has found a level this week, with domestic weight feeder steers 300-380kg ex Darling Downs currently trading at around 650c/kg liveweight (heifers 20c less), and heavier feeder types 400-500kg for 100-day programs, making around 570c/kg.

Apart from a brief spike in December when heavy feeders got to around 585c, before drifting back to a 560 in January for reasons described below, these are all-time record highs for feeder cattle in Australia.

January is generally a period of short feeder cattle supply, but equally, log-jams in feedlots caused by lack of processing space last month due to Omicron infection among plant staff reduce some demand for feeders until space opened up.

In comparison, forward contracts on 100-day HGP-free export-weight cattle for May-June delivery are currently are around 900-910c/kg, suggesting lighter trade-weight Coles/Woolies grainfed cattle are making a premium of around 100c/kg over export weights.

“Grain price is still only around $360 a tonne, so the only thing that will see this record high contract slaughter cattle price shift is a retraction in the value of feeders, from their current red-hot levels,” one supermarket contract holder told Beef Central this morning.

“But while it continues to rain and herds continue to rebuild, this seems to be around the market for feeders, going forward.”

Another factor driving domestic feeder prices over the past 12 months has been the very low rate of female kill, with many heifers being directed into breeding, rather than feeding programs.

Historically, some domestic supermarket processors have seen up to 70 percent of their production made up of fed heifers, but that figure has dropped dramatically due to restocker pressure since the drought recovery started.

Some domestic-weight grainfed programs may now be 40-50pc females or less, one supply chain stakeholder said, which was putting even greater pressure on available domestic feeder steer supply and prices.

Current dialogue, including MLA’s recent Industry Projections, suggests herd rebuilding will continue for at least another 12-24 months, suggesting it will be some time yet before heifers again supply a larger proportion of fed domestic cattle.

Swaps Index

A new Swaps hedging product coming to market in coming weeks, has been compiling a weekly price index series based on flatback feeders 380-480kg 0-2 teeth, delivered Darling Downs. More than 20 supply chains are contributing data to the index model.

In its most recent report issued Friday last week, it had feeder prices similar to the week before averaging 558c/kg, but said the spread of pricing had increased, as participants looked for direction in the market. Prices reported ranged from 540c/kg to 570c/kg.

Retail prices reaching new high-ground

In online retail supermarket portals visited this morning Woolworths currently has scotch fillet steak at $43/kg and rump at $30/kg – both record highs – and in direct response to record prices being paid for contracted slaughter cattle across eastern Australia.

Product shortages are still apparent, with Certified Organic being the only beef mince item displayed by Woolworths online, selling on special for $23/kg.

Coles also continues to have ‘temporarily unavailable’ items online, listing three-start beef mince at $13/kg, rump at $33.30/kg and scotch fillet at $43/kg. Significantly, Coles has started listing pricing on some beef items on a ‘per 100g’ basis, rather than ‘per kilogram.’







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