Production

2012 bull buying season: It’s a numbers game

Jon Condon, 28/11/2012

Have the severe restrictions on live export to Indonesia during 2012 impacted negatively on bull sales for breeds exposed to Australia’s live export cattle supply catchment region?

The simple answer is yes, but the longer answer is probably not as severely as many had anticipated.

The ‘live export factor’ was one of a suite of influences raised by industry stakeholders as shaping the performance of bull sales this year, both in terms of price and volume.

Others points identified as influencing 2012 bull buying decisions this year included:

  • Breeder herd expansion, on the back of successive good seasons, delivering an overall greater need for bulls to cover the larger number of mateable age females
  • The impact of growth in Meat Standards Australia, which has now eclipsed two million head of slaughter cattle graded each year
  • The quality of the 2012 season in many areas, at least up to spring
  • Moderate cattle prices, impacting on ‘trade-in’ values on cull bulls and commercial cattle prices generally, and the subsequent impact on budgets left to buy herd bull replacements.

Data compiled by Beef Central this week on the performance of the eight largest beef breeds, based on auction results for bulls during 2012 shows that most breeds, with the exception of Brahmans, Droughtmasters and Limousins, showed a small to moderate increase in average price this year.

The full statistical report on the eight largest breeds, published yesterday on Beef Central, can be viewed here. For convenience, the two tables outlining numbers of bulls sold 2012 and 2011, and average prices and percent change are available at the base of this page, in expandable form.

Given the dramatic turn of events this year in Australia’s largest live cattle export market of Indonesia, where the national government is enforcing permit restrictions on cattle imports as part of a self-sufficiency drive, it was little surprise that breeds carrying higher Indicus content struggled to maintain last year’s bull prices.

In fact many stakeholders feared the impact might be considerably greater. In the case of Brahmans, the decline in average price this year was just 1.2pc, while for Droughtmasters, the impact was a little higher, at -5pc. That figure came off a very strong result for Droughtmaster bulls last year, however, which topped average statistics for all breeds at $5327.

There was a noticeable absence of NT, Kimberley and far north Queensland buyers at prominent sales like Brahman Week this year, as many northern buyers pulled back in response to financial conditions caused by the live export crisis.

General manager of the Australian Brahman Breeders Association, John Croaker, said while the average price for Brahman bulls paid this year at auction was down about $60 on 2011 statistics, it was probably in paddock sales where the impact of the live export crisis was seen more acutely. That certainly applied in sales into northern regions of Australia, he said.

While there had inevitably been evidence of some northern breeders sourcing non-Indicus bulls this year in an attempt to service other market outlets, this was often done on a segment of the breeding herd only, with Brahman bulls employed across the remainder.

“Some buyers, instead, concentrated on improving the quality of their Brahman purchases to lift performance, rather than going down the crossbreeding option,” Mr Croaker said.

“Using better Brahman bulls to lift herd quality means that when the markets re-open in earnest, they are better positioned to become a supplier of first choice,” he said.

Droughtmaster Society general manager Neil Donaldson said there had certainly been an influence on sales this year as a result of the live export debacle, with a lot of producers in parts of northern Australia still uncertain where their next significant income would come from.

“That makes people pretty pessimistic, and reluctant to do too much as far as future development goes. Some stepped out of the bull market altogether by choice, and got by with the bulls they had; and some, sadly, are in that much financial trouble they could not afford to buy bulls at all,” he said.

“The bull market is not unlike the stock market, in that it rides the confidence wave as much as anything. But having said that, we believe the results for Droughtmasters this year (2241 bulls averaging $5067) is still pretty buoyant, under the circumstances.”

“There’s still been more than $11 million worth of Droughtmaster bulls sold this year. It’s not all doom and gloom, that’s for sure.”  

Mr Donaldson supported the view that overall herd rebuilding across Australia had also underpinned demand for bulls this year.

“While our auction numbers have only risen a little this year, anecdotal reports from members suggest paddock bull sales have increased significantly. Commercial cattlemen opt to buy bulls in the paddock for various reasons, price being just one of those.”

Nationally, there has been steadily increasing demand evident for Droughtmaster cattle, with bull auction numbers almost doubling from 1344 back in 2001, to 2241 this year.

“Demand for bulls, for us, is more based on the amount of feed in the paddock and the outlook for the commercial beef market,” Mr Donaldson said.

“Despite the disturbances caused by this year’s Indonesian live export crisis, many cattlemen continue to see the fundamental protein demand growth occurring in Asia – the middle class is constantly expanding and they want to eat like westerners. Beef is a big part of that, and that will continue to drive confidence in the future prospects of the beef market,” he said.

“That’s likely to be further reflected in the performance of the bull replacement market in coming years.”

Mr Donaldson also saw opportunity for breeds like Droughtmaster in the rangeland regions of northern Australia in the current expansion in interest in grassfed products because of its natural, free range image, particularly in Asia.

With MSA grading continued to rapidly to beyond two million head last financial year, some stakeholders argue that commercial pressure is now being exerted in bull purchasing decisions to moderate Indicus content in order to lower MSA boning groups and achieve better grading outcomes. Similarly, the explosion in grassfed MSA grading (now more than 50pc of all MSA carcases graded) has generated a need for easier-finishing genotypes, some argue.

Editor's note: Since yesterday's report, the Santa Gertrudis Breeders Association has revised its 2012 sale figures, including a couple of smaller overlooked sales in WA and elsewhere. The new 2012 year figures are: 2284 bulls sold at auction for an average price of $5310.

 

  • Tomorrow: Angus Australia’s Peter Parnell discusses the impact of MSA on bull demand, the trend towards yearling bulls and other issues.

 

 

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