RMA Network CEO Chris Howie.

I HUNG off on this article for the rain working on the percentages that the BoM may eventually get one right. In many areas with paddocks being so dry and the ground temperature low we have moved from a brown drought to a green drought so feed will remain short for 6-8 weeks. However, we now have hope that feeding livestock is adding value not just a job.

Pragmatic support is needed

For the southern readers it is the time to gather facts and not regurgitate how dry it has been. It is so important to be pragmatic now not emotional with so much hard work done to maintain breeders. It is also a call out to financiers to work with farmers to maintain their livestock enterprise, not sacrifice them as a chip to offset a cropping program.

The experience of an agri-lender needs to build on livestock knowledge to help producers, not run with an agronomist cropping spreadsheet as the only source of truth because it is easy. So many stock agents are prepared to help new agri-lenders understand the fundamentals of a breeder or trading program if asked. I remember before the privacy tidal wave occurred how many beneficial conversations were had between agencies and banks about mutual clients, especially at a saleyard where you can see what is happening.

Feeding versus replacements

If you got some rain and have held your stock this long my considered opinion is keep feeding. This will be more cost effective than buying replacements back in. Young ewes and heifers have been the opportunity since February and those that have converted older breeders into a younger inventory have done very well and put a bit of money in the bank. If you think your paddock feed is up and away give it a chance and feed in containment for a bit longer. The same applies if you are considering buying some replacements or restockers – jump in early at a cheaper price and feed them some hay on a tree line. It will be a lot cheaper than going toe-to-toe with everyone else in late September.

Sheep and lambs

A few months ago, I spoke of “weight is king” for those feeding to sell lambs or mutton. June has paid dividends to those that made lambs heavy returning highs of over $400. In turn, this has driven up the value of store lambs and mutton to feed exponentially.

If you don’t have lambs to sell now these prices are of no consequence and are dangerous to use as a reference. The rules of trading still apply, and it is very important to remember the following.

 Feed to a target market and lock a price in.

 The money you pay for stores does not guarantee a margin, do your sums.

 Don’t buy ill-thrift lambs – runts are always runts.

 Do you have the money to finish the lambs and do you have the right feed?

 Factor in the risk of acidosis if you are not experienced?

Lamb prices and sucker turnoff

We have now publicly broken the magical $10/kg cwt lamb barrier with several forward contracts and Coles dropping $10.50/kg into the market this week. It is highly unlikely the south will see any run of sucker lambs until September and lambing percentages are well down. Many ewes have lambed in containment and paddock feed is a long way off yet. The lead of any mob makes up about 20 percent, so push them along as fast as you can to capture the market.

As we head towards spring we will see the lighter finished lambs giving you a return well in advance of weight gain until any sign of numbers appear. For the Western Australian readers, make sure to continually compare the freight differential between prices, because your early supply this year should be a winner for you.

Merino ewes set to shine again

The old girl – the Merino ewe — that everyone loves to discredit is about to shine again. It is easy to talk of those that will exit sheep, but an enormous number of Australian farmers understand how the Merino can provide a working capital injection for your books on a 12-18 month turn around.

Wool is the bye product now of an extremely versatile meat production unit. They’re a bit like the old Holden 138 motor – they cop a flogging and still get you to where you need to be. Anyone under the age of 48 will need to look up this motor on Google.

Ewes with lambs at foot or scanned in-lamb ewes are still buyable and worth considering as some cropping programs activate and sadly they must be sold. I was speaking to Phill Butt, Butt Livestock and Property at Yass, and we agree the opportunities still arise if you look outside of the square. Becoming fixed on the “I only buy ewes with blue ears” can leave good money behind in a trade or lamb enterprise.

Cattle – difference in breeds

We are seeing a separation in pricing between crossbred cattle  form the north and quality Angus cattle in the south. This is not a breed bias argument, just fact. The Angus programs developed over a number of years cannot substitute other breeds to fill the gap. The enormous turnoff in the south has seen feeder numbers fall rapidly, causing prices to increase. We have already seen $4.90/kg for 463kg cattle on AuctionsPlus for the right feeder sold by Nutrien at Walcha in New South Wales. It is also worth looking at the increasing ration cost because a lot of hay has been sucked from the system for drought affected areas. As a result, we may see a triple-edged sword of low Angus feeder supply creating an exit hole in 150-200 days’ time, Angus weaner numbers being well down because of the southern sell off and a difficult ration cost until spring hay starts to appear.

On the other side, the northern supply of crossbreds and flatbacks is well supported by numbers and feed available which allows the commodity style beef to remain competitive at an export and domestic level. With feeder rates for these specs still in the high $3/kg, we may see an increase of southern interest starting to fish in this market to fill holes.

Marcus Bower, McCulloch agencies in Tamworth said processor enquiry from the south for slaughter cattle is increasing. However, many producers are already aligned to set programs. This means that the pressure to lift price to find supply in northern NSW and southern Queensland will appear but it still needs to offset the freight differential and curfew shrink. July and August have always been the larger months for heavy cattle turnoff in Queensland and this year may provide some extras held over on good feed from last year. It’s a bit of a balancing act for everyone.

What will livestock prices do?

Episode 3 analyst Matt Dalgleish has a good article that highlights processing pressure points. Most processors have been running at capacity with some adding extra shifts. It’s nothing new here as we have all seen the export data showing historically high volumes. This means price will be used to obtain supply; however, at some point in time a processor will look at the margins and reconfigure their workforce to match reduced supply. From past experience, this can change price very quickly. Also it is the time of year we see traditional maintenance shut downs which also impact demand. I am not suggesting any dramatic negative price changes in the near future, but economics say it will not go up forever and we are now in uncharted territory. Don’t get greedy – take the wins and be careful about the re-entry price because that is where the devil hides.

Buy frame to hang the meat on

Even though rain has fallen in various areas it has now moved the needle to feed what we want to keep waiting for grass and exit everything else. June and July are a great time of the year to buy with most cattle light and fluffy. Compensatory weight gain is the secret ingredient in the current season – buy frame to hang the meat on.

Sale day opportunities

 Friday 13 May Carcoar – 3000, Mt Gambier – 3000, Tamworth – 4000, Casino – 3000

 Thursday 19 May Leongatha – 3500 Mortlake – 6000,

 Friday 20 May Ballarat – 5000

It’s sire time

The July to September bull and ram season is getting ready to fire. Shad Bailey, Say and Co, Glen Innes said the lineup of sires is very good following the season since Christmas. With the advent of systems like Black Box, Optiweigh, EID scanning on portable scales for average daily weight gain and MyMLA feedback, never has there been a better time to analyse your livestock performance before buying sires.

Processors and feedlots are absolutely focused on end performance with yield, feed conversion and Meat Standards Australia leading the way. Take the time to look at how a small change in your sires may help you create more income on the same amount of land. Ask some questions of the buyers of your livestock, even if the feedback is not what you want, it will help you improve.

Heifers will pay the bills

The modest unloved heifer continues to pay the bills. With many purchased around $2.80-$3.20/kg lwt at the weaner sales we are now seeing heifer feeders quoted up to $4/kg. More importantly, the ability to draft off the tops to improve your standing herd or target a pregnancy-test-in-calf trade adds another level of opportunity. This opportunity exists most years, although it is important to have them locked into a price by September to avoid the October flush in a normal year.

The phantom herd strikes

I did laugh at Jon Condon’s reintroduction of the phantom. It is easy to look to blame someone when numbers don’t appear because they have been booked across multiple buyers to secure space during times of high volume without any price discussed or “we’ll look after you when you send them” promises. The signing of a sale contract, not a booking sheet, makes this phantom phenomena disappear. It does require the entry of a price or the basis on how the price will be determined in the special conditions; cattle or sheep, the same rules apply. In my time, I have not had a client or a processor walk on a signed contract; we may have moved the delivery date but never reneged. There is nothing new in this as most contracts are now electronic with terms and conditions attached. Any stock agent, processor, feedlot or exporter worth their salt gets a contract signed every time or should from now on.

Consider agency as a career

Through my network I am receiving numerous calls about availability of staff to fill positions all over Australia. Normally it starts with “Have you got any good young ones around”.

So many great careers have started in agency because they learn how to engage with people. Opportunities all over Australia exist and specialised training available gives young or old a head start. The next agency and supply chain workshop starts on 3 August with registrations now open. This course is supported by RMA Network, MLA and Wodonga TAFE and is open to all who are interested in honing their skillset. With more than 300 people trained, Simone Dand can provide you or your business with any information. [email protected]

The Howies and Elders

With my daughter Jaime Howie at Elders Albury departing Elders on the next step in her career, it is the first time in 67 years that Elders has not had a Howie working for them. In 1958, Jeff Howie started with Elders as a 15 year-old in Adelaide and gave 42 years’ service. In 1988, Chris Howie started with Elders Murray Bridge and served 31 years. In 2018, Jaime Howie started with Elders at Wangaratta, to give seven years’ service, for a total of 80 years. When including my late mum, Lorraine, and my wife, Kate, the years of service total just over 95 for the big E. So many good friends made and stories to tell even if the corporate world doesn’t remember like it use too.

Opportunities

 Continue to feed for weight.

 Don’t let emotion rule your decision.

 Buy restockers before spring if you can.

 SIL/PTIC/LAF or CAF females are worth a shot.

 Avoid buying poor stock because they are cheap.

 If you are happy with a price – take it and move on

 WA maybe in the box seat for early lambs

 Sign sales contracts – it’s not that hard, you are not that busy

 Agency training – start your career.