THERE have been sharp rises in feeder cattle prices across eastern and southern Australia over the past fortnight, driven by a number of supply and demand factors.

The market for good, heavy flatback feeders sourced out of the paddock for delivery Queensland feedlots this week is currently around 360-365c, breaking out from a range between 320c and 335c that buyers were prepared to pay for a long period since late April.

Paddock sales of Angus types into large Queensland and northern NSW feedlots are happening this week at anywhere from 400-410c/kg, supply chain contacts said this morning.

The Angus segment moved perhaps a month earlier than flatbacks due to the drying-up of southern supply, but has still lifted from earlier rates around 360-370c.

In southern regions, good Angus feeders out of the paddock are now closer to 420c/kg, Beef Central was told, but volume remains very tight. Flatback steers are around 380-390c.

Indicators surge higher

The NLRS national feeder steer indicator, plotting feeder weight purchases across 24 NLRS reported yards in NSW, Victoria, South Australia and Qld, sat at 363.4c/kg this morning, up 38c/kg on this time last month and 41c higher than a year ago. The current feeder steer indicator value is the highest seen since April, 2023.

Among individual physical sales held so far this week, feeder weight steer prices have also shown a marked rise, with Roma sale yesterday reporting +400kg steers to feeders averaging almost 375c/kg, up 16c on the previous week. Odd pens sold into the 380s-low 390s range, with one large line of 322 Maranoa-bred Angus and Angus cross steers (Charolais and Droughtmaster maternal lines) averaging 431kg making 384c/kg. One anecdotal report suggested those cattle went onto oats – not grain (see oats references below). Lighter feeders 330-400kg at Roma yesterday averaged 377c, up 11c.

At Gunnedah yesterday, heavy feeder steers were keenly sought with the trend as much as 17c/kg dearer that the previous week, while at Wagga on Monday, heavy feeder steers were scarce, but made between 350c and 402c/kg.

Key influences

A number of supply-side and demand-side influences are in play, contacts told Beef Central.

The NLRS feeder indicator turnover reflects the fact that supply volume is clearly a factor, with average weekly volumes contributing to the indicator since 21 July averaging around 7000 head – at least 2000 head less than the same period back in March-April.

The strength in the feeder cattle market has also underpinned a surge in the industry’s main Eastern Young Cattle Indicator, reaching 681c/kg (dressed weight equivalent) this morning – its highest level since April last year, having risen almost 80c/kg (dw equivalent) over the past month.

Severe shortage of feeders in southern parts of Australia – especially cattle with weight – is at least partly behind the current price kick.

Chris Howie

Beef Central columnist Chris Howie from RMA believes the rapidly drying conditions experienced earlier in the year in large parts of Victoria, South Australia and southern NSW pushed southern feeder cattle to market considerably earlier (early autumn) than normal, due to lack of feed.

“That’s left a void, that’s now contributing to the current rise in price,” he said.

“One southern lotfeeder told me that back in late January, he had absorbed as many as he could – which he normally would not have seen until May or June,” Mr Howie said.

That trend in turn had probably kept a lid on feeder prices seen earlier, which sat for a lengthy period between 320-335c.

He said the turning-point in the current price cycle for feeders probably started at the Alice Springs annual Show sale a fortnight ago, when prices were around 20c/kg above prevailing rates at the time.

“That was the first time feedlot buyers flagged where the market might go to,” he said.

Heifer option

Mr Howie said the latest rise in feeder steer markets had prompted some lotfeeders to move to heifers at a cheaper price, rather than steer.

“If you need 500 or 1000 a week intake, you just can’t physically buy them all as steers in the south, at present,” he said. “It’s purely and simply on numbers.”

“Heifers have been the big movers. A lot of feeder-weight Angus heifers that were making 270-300c/kg earlier are now heading towards 400c/kg.

“Going back 10-12 weeks ago, you could buy any number of light Angus heifers at 250-270c/kg, and people were struggling to find homes for them. Anybody who put a few of those away has made a hell of a quid,” Mr Howie said.

It was not uncommon to see the basis margin between feeder weight steers and heifers get closer when supply tightens up, but this year was perhaps more acute than normal.

Beyond the heifer option, other evidence of displacement of normal feeder steers was seen at recent physical sales where one feedlot buyer that normally prioritises EU-eligible feeders was happy to buy ‘generics’, at somewhat lower prices.

Demand influence

One the demand side, several lotfeeding contacts pointed to one large Darling Downs grainfed producer with multiple yards feeding around 70,000 head in total, being at the lead of the current price trend.

“Simplicity is feeding one type, but when numbers are short as they current are, lotfeeders are having to be more flexible,” Mr Howie said.

Oats factor

Another demand factor is the extra competition being seen at present for feeder weight steers from producers with useful oats crops in areas of southern Qld and NSW, following earlier rain.

Forward contracts on 100-day cattle lift

Forward contracts being offered for 100-day grainfed cattle for November delivery are this week sitting at 680c/kg carcase weight. Another Queensland grainfed processor had 670c forward price for October delivery, but has not yet offered a price for November. Not that long back, 650-660c was the best forward contract money to be had.

Looking forward, a number of contacts anticipate that few feeder-weight cattle will start to come out of the northern NSW cropping areas shortly, where the crop is best.

Chris Howie believes it will be a considerable stretch before numbers of feeders out of southern Australia start to grow.

“And feeders in the south don’t want to have too many heifers on their books after October, otherwise they get too much condition on them too quickly.”

Anecdotally, most large commercial lotfeeders across eastern Australia are already operating at higher occupancy levels, having taken advantage of earlier feeder prices.

“I don’t think there’s a lot of empty pens at present,” one contact said. “So any purchasing from here is simply to replace vacancies as they happen, rather than trying to expand numbers.”

Chris Howie thinks there will be only limited feeder supply out of southern parts of Australia until well into September.

“They’ve had an extremely hard season through the bottom end of South Australia and into Victoria. They’ve unloaded cattle, and they haven’t got any bulk of feed yet, either,” he said.

Feedgrain prices softer

One the positive side for lotfeeders, feedgrain prices have softened considerably over the past few weeks, taking some of the sting out of higher feeder prices for those who are not sitting on large forward-bought supplies. However yards with forward-bought grain will be slow to receive benefit.

Mr Howie said most lotfeeders’ inventory (representing purchases made during February-May), made the buy price look very good, but now that the feeder market has made a lift, any softening in feedgrain price would be welcome news to partially offset higher cattle purchase cost, he said.

Lower grain price may encourage some lotfeeders to place cattle on feed at somewhat lighter weights, given the current shortage of heavy feeders, another contact suggested.

Meat market wise, while the US remains strong and is only likely to get stronger in coming months due to lack of domestic supply, other key grainfed markets are patchy, at best. Economic malaise in China has dramatically slowed Australian beef trade, while in Japan, currency movements against the Yen have made all imported beef – whether it be Australian or US – close to record high in local currency value.

It’s forcing more Japanese consumers to seek protein alternatives like chicken and pork, Beef Central was told by a group of Japanese meat industry personnel during a dinner in Toowoomba last night. More on that topic in a separate report later this week.