Prime & Store Sheep Reports

Chris Howie’s livestock market wrap: Avoid decision paralysis

Chris Howie, March 9, 2021
Chris Howie offers his perspective on market trends and opportunities in coming weeks and months, drawing from both his own observations and from a wide contact network of producers, agents, processors, industry associates and leaders developed during his extensive career as a livestock agent. Chris is Stockco’s business development manager.

 

Don’t get caught by decision paralysis – Making sense of information around supply, demand and prices for livestock and red meat is becoming more difficult with conflicting views appearing in rapid succession through the various information channels.

As an example, we heard this week that there is a significant oversupply of export quality beef coming onto the domestic market yet 12 hours later came a TV news report that meat prices are going up. With lambs, the supply of numbers for winter is a talking point; however, we see a contradictory view stating prices may ease.

Much of the analysis reported uses historical numbers and graphs which look sexy in an article yet fail to take into consideration the driving factors of the time that created the “against trend” supply or pricing blip.

My simple view on the world is most of the time our supply and demand trends remain consistent and the focus should be on producing the best quality article to hit your target market.

Leading into this Winter, I am certain the residual impact of drought supply numbers will look after the prices for producers.

Opportunity decision making

It is surprising to find many are still cautious about the decision on when to buy to make the best of a trading opportunity. Traditional traders buy when they sell or align themselves to a certain sale period offering the article they want e.g. weaner sales, stubble trades and lot-feeding.

However, trading opportunities can come at any time. It may appear because of a blip in the market, unexpected surplus pasture due to rain or livestock being sold early, supply shortage leading into winter, availability of grain from a good harvest etc. Often there is only a brief time to act and being ready is the key to success. Understanding what you can handle and how you can fund it are the key parts to making a quick quid.

Opportunistic trades are missed because the mindset in many areas at this time of the year is aligned to the coming cropping program requirements e.g. paddocks to be sown, money required for inputs, work load or the approach of winter / summer.

As an example, I was at the last Jamestown sheep sale and noticed the 20-25kg pastoral Merino wether lambs did not receive the interest the 30-40 kg models did. When I asked a few agents and graziers why they didn’t buy some of them they all expressed a mix of reasons I mentioned above.

From my past life, all I could see was an opportunity with a 10-week trade. As a case study this is what I thought the opportunity looked like.

Spring drop Merino wether lambs – bare shorn, 20-25 kg liveweight. Price was $79-$98 in large lines.

Keep them for 10 weeks on pasture with some supplementary feeding with a nominal gain of 200 grams per day = 14kg liveweight gain. Sell as 35kg average lambs into a period of short supply targeted at lamb finishers aiming for a late June-early July supply contract. I expect these lambs will bring $150 mid May providing a conservative $30 margin allowing for feeding costs. No real science just being prepared to have a crack.

Sheep

We are at the normal change of season for sheep we see every year. As mentioned above, the caution factor starts to hold many back leading towards sowing season and Winter. Last week’s Jamestown sheep sale saw graziers operating on the heavier Merino lambs 40-45 kg lwt at $150-$182, 30kg lines made $124-$127 and the 20kg models $79-$96. Fresh Merinos Sept/Oct shorn about 21kg dressed made $174 and the 23kg dressed lines $180. Ewes continued to be the flavour, with competition still strong across all states.

Wool is back on a positive trend, but one thing I did notice was any sheep with a skin under 40mm was not altering the value so this is maybe a win for those buying sheep in.

Winter supply is always a trying time for sheep and lamb and will be magnified this year with the reduction of numbers in Western Australia and the limited Spring lamb supply following the drought.

My gut feel tells me the lamb and mutton job will be strong and a sensible approach is to let processors know what you have coming available, and the price will look after itself. Keep your eye on the other side of Easter.

Goats have jumped back to the top of the red meat pricing heap with $10/kg floating around. Those that have embraced the use of electronic sales platforms to sell goats are reaping the rewards for feral and domestic genetics.

Farmgate Auctions ran a goat sale early this month with LRW Rural Pty Ltd, in QLD, offering some quality goat genetics. Auctioneers, Richard Simpson from Simstock and Jack Burgess from GDL Blackall officiated the on-property proceedings, with over 125 people attending the auction in person and 82  buyers registering with Farmgate online. They came from Aramac in Queensland to Albury in New South Wales.

The sale showcased 127 stud and commercial bucks and does, with 280 bids logged online and a clearance rate of 86 percent.

  • Top price – 2yr old standard Boer stud buck, Graham Reimers of Farmworld Boer Goats, Maryvale QLD, $4000
  • Highest price does $1500/head
  • 117 bucks averaged $606/head

Gus Foott, Nutrien Charleville has also created a niche for his business in regularly offering lines of drafted goats on AuctionsPlus.

Sporting clubs –The disruption last year in rural Australia has seen an immense amount of financial pressure put on sporting clubs across all codes. These clubs are the social glue and cash injection for many towns and rural communities. The clubs are totally reliant on unpaid volunteers and sponsors to survive and provide the break from day to day work every Saturday. Many leagues have also been hit with higher affiliation charges, because the controlling bodies have cut administrative support and financial assistance, in addition to COVID compliance costs. Even if your business or enterprise only has a limited capacity to sponsor a club, make the effort to help out. It could be the difference in your club of choice making it to the next season.

Cattle

The only way to approach the current cattle prices is with a smile and look at the positivity the sales are creating. Having covered NSW, Victoria, South Australia and Tasmania this month, all cattle producers and service providers are riding the wave. How long this will last is beyond me, but I think we need to enjoy the sunshine and rainbows while they are here.

Mountain calf sales followed the trend of the recent prices (see the the Murray Arnel report on Beef Central), with some allowance for freight. Morgan Davies, Elders Bairnsdale said the main buyers were NSW lotfeeders and graziers, and a smaller SA presence. The 280-370kg calves seem to have found their level at $4.70-$5.50/kg, but the light cattle prices topped out in the mid to low $8 for 200kgs, ranging from $6.80-$8.33. Some 180kg calves made $1500.

I attended the Powranna weaner sale in Tasmania on the 4th of March and I must say the new complex and the quality of cattle presented was very good. The season is exceptional and looked more like mid-Spring than the start of Autumn.  Warren Johnson, Nutrien Tasmania kicked off the selling of 3000 to a very large crowd of onlookers. All were entertained by the spirited bidding, which came predominantly from local graziers and feedlot/processor supply backgrounders. The prices achieved mirrored the mainland sales and the larger quality lines I think achieved a premium above the mainland rates.

Steers 350-400kg @ $1800-$2120 or $4.97-$5.35/kg lwt. 300-350kg @ $1680-$1900 or $5.30-$5.90/kg. 250-300kg @ $1660-$1790 or $6.21-$6.45/kg. The 170-250kg steers ranged from $6-$8.18/kg for a straight line of 71 Angus steers weighing 193 kg and making $1580.

Heifers continued the trend and ranged from $5.16-$6.45/kg on the main lines.

Bob Jakins and Cameron Wilson, Elders Queensland reported a slight softening in prices with flat back feeders to $4.20-$4.30 (-20c for heifers). The southern influence is also waning on cattle showing ear and hump. However, Bob said it was a great result for a run of quality Santa cows from Chinchilla offered on AuctionsPlus that made $3200, proving that quality still equates to price.

Bull sales – Just bloody fantastic. A true reflection of the current cattle market and reward for the breeders who have persevered through the hard times.  I am sure the $160,000 paid for the top price Injemira Poll Hereford bull made many old red and white followers smile.

A quick update from Patrick Burke, Adcock Partners Property & Livestock, Katherine NT: Patrick said “Demand for cattle to the live export trade is set to remain strong through the month of March. The top end wet season continues, making many cattle still inaccessible to the market. Pricing through the port of Darwin remains unchanged for cattle exported to Indonesia, with feeder steers up to $4.30/kg and feeder heifers up to $4.10/kg. Smaller numbers of PTE store cows are starting to make their way to the live export market as they become available. Exporters are indicating they expect cattle to become more accessible through the month of April, coupled with an anticipated drop in demand from Indonesia, so we should expect to see prices adjust next month. Some Northern Territory producers are taking advantage of the domestic market and have sold lightweight store cattle and replacement breeding females to the south.”

Opportunities abound

SIL ewes – lamb down and sell

Lambs to finish into winter

Cow and calf units to freshen and split

Selling cattle that are ready with current prices.

Offering goats online

Not getting greedy

Sponsor a sporting club

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