DRIVEN in part by a seasonal dip in supply, Wagyu feeder cattle prices across eastern Australia have lifted from rates seen earlier this year, with well-bred F1 feeders out of good Angus dams currently worth anywhere from 450-500c/kg liveweight.

The middle of that range seems to be the thickest part of the current market, with one large Darling Downs supply chain on Friday saying his business was offering 470c/kg plus freight for suitable F1 cattle with prior history of good performance.

Unlike the generic feeder cattle market, Wagyu F1 to Fullblood pricing is always much more opaque, with virtually no cattle sold via the saleyards or online channels, and wide variances seen on genetic quality for F1s (both sire and Angus dam side), and any prior performance history.

The market for paddock-sourced F1 cattle has risen perhaps 30-50c/kg liveweight over the past couple of months, driven by typical tighter later winter supply.

Based on quotes provided by a bunch of large southern Queensland/northern NSW feedlots running F1 programs 360-400 days, Beef Central back in April reported F1 feeder steers making anywhere from 410c to 440c/kg ex Downs, depending on quality.

But the meat harvested from those animals (April intake) will not find its way into a restaurant in Shanghai, Seoul or San Francisco until at least August or September, 2025. This clearly illustrates the incredibly long horizons Wagyu supply chains have to deal with, between justifying feeder purchase prices, and what they think the demand and supply environment will be like, more than a year ahead.

F1 feeders entering the feedyard in early September this year will not arrive as boxed beef in customer’s chillers until close to Christmas, 2025.

Similarly, F1s completing 350-400 day programs this month reflect feeder prices paid back in July-August last year. Fed cattle going to slaughter in April (around the time of the annual Wagyu industry conference held in Cairns) still bore the effects of feeder prices enormous feeder prices around 650-750c/kg being paid in early 2023.

Booms and busts

At their peak during the last ‘boom cycle’ for Wagyu feeders in late 2022, Australian F1 feeders reached an incredible 980-1050c/kg liveweight for well-bred F1 examples, Beef Central reported. But by November last year, good F1 Wagyu feeders were worth only 330-350c/kg – about one third of their price seen the same time the year before, as international demand fell in a hole due to tight economic conditions, plus producer concerns over what appeared (at that time) to grow into an extremely dry summer season, pushing feeder cattle to market.

On top of that, one large Wagyu export processor offering 12-month forward contracts pulled out of the market for a period becaseu of the trading environment, exposing Wagyu feeders to greater risk.

Fortunately, BOM’s pessimistic forecast proved to be somewhat wayward, and prices recovered somewhat by the time of our last F1 feeder report in April.

Meat demand soft

At the other end of the F1 Wagyu pipeline, international demand remains ‘very soft’ for Wagyu beef, Beef Central is told by traders, with China demand remaining very flat, and both Korea and Japan being impacted by economic conditions.

The only international market of size showing any real strength presently is the US, but a risk is emerging that ‘every man and his dog’ with Wagyu beef to sell is going to saturate the US food service and retail markets with Wagyu beef.

Oversupply is a risk, especially as volume is diverted to the US from other traditional customer markets, one trader told Beef Central.

“People have been doing that for the last three or four months,” one Wagyu trade contact said. His company had given cuts-basis offers for third quarter F1 Wagyu trade that were typically 6pc behind the previous quarter in value. He said that reflect both general flatness in international demand for F1 beef, as well as too much product being directed to the US market.

Relying too heavily on US trade for Wagyu beef could also present problems in disposing of both hindquarter and forequarter cuts at optimum value.

The only exception to all this is the trimmings market which remains relatively strong in most parts of the world, with attractive premiums seen for Wagyu trimmings.

Close-outs mixed

Under current conditions close-outs on F1 380/400-day grainfed cattle at present were showing “50pc of cattle with a small profit, and the remaining 50pc at a loss,” one large trade contact suggested.

While the current feeder price cycle would help offset some of that profitability gap, pushing more closeouts into positive territory, that was still a long way off, given Wagyu production cycles, he said.

Ration prices heading down

Softening in ration prices as current lower feedgrain prices take effect would also start to help the profitability equation, several lotfeeders said.

A typical longfed Wagyu eats around four tonnes of Japanese style ration (50-60pc of which is grain) during a 400-day program, meaning grain price movements are a significant part of the cost/return equation.

While feedgrains are currently trending sharply downwards in price (see today’s weekly feedgrain report), most large feedlots carry a lot of cover in grain supply, are are still eating their way through much more expensive grain supplies bought earlier, contacts said.

“We are still feeding dear grain,” a manager for one of the nation’s largest lotfeeders told Beef Central on Friday.

“We, and a lot of others, bought a lot of grain earlier on the pessimistic weather outlook that was about towards the end of last year. It will be some time yet, before we start to get any real benefit from current lower spot prices. We’ve seen the highs of $480/t for grain late last year down to $270/t at harvest this year – they’re just massive numbers, and it’s why these feedlots are absolutely struggling at present, due to these huge swings in grain and cattle price.”

“Black feeder cattle that were worth 230c/kg in October are now worth 420-430c now.

“That difference, for us, was worth $100,000 per b-double load of feeders, which is very damaging for any business.”

Premium for purebreds/Fullbloods

While good F1 Wagyu feeders are currently making around 450-460c/kg ex Downs out of the paddock, Fullblood and purebred (F4 and higher) feeders are making a big premium over that, as demand for higher Wagyu content cattle (and beef) continues to grow.

Trade sources on Friday quoted anywhere from mid 5’s to low 6’s for good purebred feeders. Fullbloods are anywhere from 30-50c/kg liveweight above that, again, pricing a good quality Fullblood feeder in early September at around 650c/kg.

Some yards in fact offer no premium at all for Fullbloods, feeding limited numbers at purebred purchase prices in co-mingled mobs.

That big 100-150c purebred premium that currently exists over F1s, is apparently being driven by a spike in high-marbling beef demand (scores 8 and higher) out of China, and more specifically, demanding beef from cattle carrying higher breed content, rather than F1s and 2s, for perceived ‘quality’ reasons beyond simply marbling, Beef Central was told.

In essence, some more discerning international customers are saying they not only want high marbling (say 8s and 9s), but they want it exclusively from higher content or purebred cattle, rather than F1s and 2s. More on this issue in a separate story to come.

However the premiums currently being paid for purebreds over F1 feeder cattle did not justify the cost, one large Wagyu feedlot operator told Beef Central. He said a purbred animal needed to produce a marbling score of 8 or 9 to ‘have any chance’ of breaking even in the current environment, he said.

Angus feeder price draws closer to F1 prices

Recent price history has shown that for a period at least, Angus feeder prices have drawn closer to F1 Wagyu prices than they have for some time. Not that long back, F1 feeders were worth at least a dollar a kilo more than equivalent weight Angus.

Angus feeders, sourced primarily out of NSW and Victoria rather than northern regions, are currently somewhat scarce for normal late winter seasonal reasons, pushing prices higher recently. Downs feedlots last week were quoting 420-430c/kg for heavy Angus feeders – not that far short of prices for some F1 Wagyu. On top of that, growing expectation of demand for good quality chilled cuts into the US as a result of US herd decline has underpinned Angus feeder premiums recently.

Late winter supply for Angus feeders is always the seasonal dear point. On top of that, Angus feeder  delivery terms are often ‘next week’, while current F1s deals could easily be ‘October delivery’, one supply chain manager said.