A LARGE and growing price disparity is being seen between young steers and heifers, as the industry heads towards mid-year.

As regular markets columnist Chis Howie’s trading budget set out at the bottom of this article shows, there are some compelling opportunities in the heifer market at present, as a result.

Some recent saleyards examples have seen the steer-to-heifer price differential grow to as much as $1/kg liveweight.

Roma sale on Tuesday saw backgrounder steers 200-280kg score 2 average 367c/kg, while heifers of the same description averaged 267c – exactly 100c/kg split. The next highest weight category 280-330kg saw steers average 344c while heifers averaged 249c.

A similar pattern is evident on AuctionsPlus online trading, where last week’s national sales saw weaner steers selling at a 22 percent price premium over heifers – the largest gap seen on the online trading platform since 2016. Here’s three AuctionsPlus weight range comparisons from last week’s sales:

• 200-280kg – steers 401c/kg, heifers 315c (86c/kg split, or 22pc)
• 280-330kg – steers 388c, heifers 301c (87c)
• 330-400kg – steers 371c, heifers 329c (42c)

Some earlier AuctionsPlus weekly comparisons showed even larger price gaps. The four sales held during May showed a $177 a head difference (16pc) between 280-330kg steers and heifers, and $192 (20pc) for 200-280kg descriptions.

The two graphs published below plot price history for AuctionsPlus steers Vs heifers 280-330kg and 330-400kg over the past four years, since 2020. They clearly show the variance that has opened up since early this year.

Heifers ‘a barometer of confidence’

AuctionsPlus network general manager Paul Holm told Beef Central it had been eight years since the gaps was last this wide, for backgrounders and light feeder-type cattle.

There’s a number of opinions about exactly why prices have diverged as widely as they have in recent months. The first and most obvious is that the national herd has now fully recovered from earlier drought, and surplus heifers are no longer needed in the breeding paddock.

Dry conditions heading into winter in some areas have also pushed more heifers onto the market, as producers lighten off.

Mr Holm suggests that heifer values are a good barometer of confidence in the industry.

“The one thing producers do when they’re full of confidence is buy females,” he said. “When you know what the year is looking like, you can buy a heifer, and it doesn’t really matter. If you have enough feed, if you can’t sell her, you can just join her. In this situation people are confident enough to just buy heifers and work their way out as the year goes along.”

“But when things are a bit tight, traders know for certain what they can do with a steer – but not so much with a heifer. There’s a hundred people willing to buy a 380-400kg black steer, but who’s there to buy a heifer if it doesn’t rain?” “That’s the current thinking.”

The outlook for a young heifer was vastly different than what it may have been in the past, Mr Holm said.

Heifers once made up a sizeable proportion of domestic supermarket kills, but with some retailers moving to HGP-free, heifers are less desirable to some feedlot buyers, and they are more selective in terms of breed requirements (more on this below).

The last time the young heifer/steer price gap was this wide, the industry was at a similar stage in the herd recovery cycle, having rebuilt after two earlier drought years, Mr Holm said.

“Even compared with the height of the market in 2019, the current price disparity is much bigger,” he said. “It’s 22pc at the moment, and at its height in 2019, the gap did not get past 17pc.”

“It got to the point back then when producers were buying whatever they could get, and at that time, a lot of the young females being bought on AuctionsPlus had a northern (Bos Indicus) influence, probably at a lower price point.”

Asked where the price point was that would see heifers come back into favour, based on value in the purchase, Mr Holm said he thought the industry had reached that point now.

Some smart operators were already starting to jump on cheap young heifers, spaying them or sticking in an HGP, and aiming growing them out, he said.

“Are heifers now too cheap – that is the question,” Mr Holm said. “There has to be a point.”

Price gap is unusually large

A cattle buyer operating for a large southern Queensland feedlot, having been to both Roma and Dalby sales in the past few weeks, said he had seen disparities of up to a dollar a kilo, liveweight between steers and heifers of similar weight.

“It’s unusually large, just at the moment. It tends to get worse in the bos indicus types, but then the higher indicus steer can cop a big discount in the feeder market anyway,” he said.

“There was still plenty of 270-290c/kg being paid for heifers this week, especially in trade weights,” he said.

Some little heifers 220-230kg at Dalby yesterday were making only low 200s, while 270kg Angus heifers ideal for butchers made around 260c/kg.

“Some larger feedlots specialising in yearlings are looking for a different animal today,” the feeder cattle buyer said.

“Some of those heifers may be ending up in smaller feedlots that are prepared to manage them (‘tolerate’ was the specific word he used), but the demand is not there from the big yards, at least unless they are preg-tested empty. They all have staff challenges, and they don’t want any more management issues than they can handle.”

So why aren’t lotfeeders more amenable to feeding more heifers?

There’s a number of reasons, an experienced feedlot consultant told Beef Central. In no particular order:

• Risk of entering the feedlot pregnant, creating management and animal welfare nightmares in the feedyard
• Particularly in HGP-free domestic yearling feeding programs, there’s the risk of over-fatness in heifers of the same frame size, due to earlier maturity (depositing fat at a lighter liveweight that the equivalent steer). The risk with purchasing older heifers to try to offset is running into dentition issues
• Typically a 10c/kg carcase weight discount applies on heifers at the meatworks below steers, due to lesser meat yield
• Lower feedlot weight gain – up to 10-15pc less in some cases
• Bulling behaviour in the feeding pen as unspayed heifers enter oestrus, made even worse in mixed sex yearling pens. This can also impact feeding performance.

A livestock manager with one of the nation’s two largest domestic supermarket groups said his company had not yet seen any great difference in the split between grainfed trade steers and heifers coming through the company’s northern or southern supply chains. However in the distant past, at times the same company’s northern supply chain recorded up to 70pc heifers in its grainfed production mix.

Some of the cheap heifers on the current market are ending up with specialist processors like Green Mountain at Coominya, for the heavy vealer trade.

A handful (only small numbers, Beef Central is told) are also going through to grainfed 100-day programs, but they must be of the right genetics and framescore to avoid over-fatness. There is no technical or regulatory reason why heifer beef cannot be packed into a 100-day grainfed carton, apparently, but it is not common.

There could be almost $400/head difference at present in price between a Queensland heavy 400kg feeder steer and a heifer capable of feeding for 100 days, the cattle buyer said.

Good type heifers with some Euro influence and frame – types considered more suitable for 100-day programs – were making around 300c/kg liveweight at Dalby yesterday.

Better ‘line of sight’ on steers

Beef Central’s regular markets columnist Chris Howie from RMA agrees that confidence is playing a big part in the current market disparity.

“People have line of sight on steers,” he said. “They know they’ll end up in a feedlot, but its not the same on heifers.”

“But having done some numbers, even with lower dressing percentage and yield, there’s still a solid quid to be made out of trading heifers at present,” Mr Howie said.

The freight component was knocking some heifer prices around, especially for secondary animals.

“They are doing their sums and saying, if I buy a steer at 330c/kg and sell him for 400c, I can make a quid, after freight. But buying a heifer at 250c, how much am I going to sell her for, after freight?” he said.

Mr Howie gave an example of a northern trader who was presently buying 250-260kg heifers out of Tasmania, bringing them home, intending to polish them up, mate the lead to a bull and finish the rest either on grass or to go onto grain.

“They are also anticipating (northern) demand later this year for better-bred joined heifers,” he said.

“But the sting has gone right out of the market in the south. A producer originally intending to retain, say, 100 heifers this year has seen the season tighten, and has dumped another 30 or 40 of those animals onto the market.”

North of Dubbo, the season was generally not too bad, Mr Howie said, but south of Dubbo remained very tight for feed in some areas.

Using a few simple calculations, Mr Howie ran some numbers on a northern trader buying southern heifers at present. He based the outcomes set out in the tables below on:

• Average daily gains of 0.9kg/day, and 1kg/day (see two separate sets of figures below)
• Interest rates available at present at circa 10.5pc to trade (but only looking at a five-month trade, so 4.7pc equivalent)
• Grazing crops will provide better performance than his estimates (based on grass), but Mr Howie’s figures have ‘stayed conservative’. Native clover and herbage in the west of NSW also give excellent weight gains.
• The freight is built into the delivered price and then additional freight added for sale. Again probably more than needed.

The results are based on:

Heifers out of Victoria/SA 220-275kg ranging in price from 240-270c/kg.

Tasmanian heifers bought at 230c/kg, with steers today buyable at 290c/kg.

A freight component of 50c/kg is included – for Tasmanian sourced cattle, a bit more, but cattle currently being shifted to the mainland were ‘landing well,’ he said.

The trading budget results set out below show that with a conservative weightgain figure, and achievable end price of 300c/kg, the trading margin on the deal ranged from $146 to $208 a head, depending on average daily gain.

“There is a solid margin, and that’s without any breed premium added,” Mr Howie said.

“Heifers also have a three-way bet – join and sell as PTIC, finish on grass into a grass premium product to processor or take to feeder weight and sell onto grain.”

“Seems to be confidence in south is about lack of feed, and in the north steers are the easy calculation with only one moving part.

“Straight lines are the best, but if buying mixed colours adjust buy price accordingly as the breeding option erodes,” was Mr Howie’s advice.