Chris Howie from Agri Careers and Consultancy offers his take on southern livestock market trends in May, 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 and former Elders national livestock manager.
A WEEK is a short time in livestock and especially in the sheep market.
Prices broke through previous thresholds in the last week of May, but overall the southern sheep and lamb job has been excellent.
Volatility was still around early, but in the last three weeks the pricing has found its feet and consistently improved across all types. Lambs in general started at 720 c/kg and are now 830c/kg and better.
Mutton was flat line overall in April at about 470c/kg and is now comfortably at 560c/kg.
Records seemed to flash up every day with the big hitters at the Wagga, Bendigo and Forbes saleyards, but all centres are having a great run at present.
It is worth looking at last year to notice the jump in prices happened in July. I can remember being at Peterborough in the early 90’s and the yarding of 40,000 might have averaged $8. All indications are the last two weeks have seen lamb and sheep yardings in several centres averaging over $200 per head.
Peter Cabot, Landmark Wagga said the sale at Wagga on 23 May was “as good as he has seen for lamb. Many of the lambs were extra heavy and the professional operators have had them on ration for an extended period. Even considering the ration cost the returns have been exceptional” 800c/kg seemed to be the base price with several pens making close to 900c/kg. The next Wagga sale lifted again on all reports.
Kevin Thompson from Elders Wycheproof gave me a call about how the Victorians are faring. Plenty around the traps are heard to say “too much for sheep”. Well Kevin and I beg to differ. Yes the price has lifted considerably since January/February, but there is still a great margin in short-term trading (out before the start of August) or ewe & lamb propositions, at present.
Thommo also said: “Because of a great rain in his area many croppers who run sheep are going to put in an extra paddock. This means sheep they would normally run through will be sold. Again this creates a supply opportunity for those looking to take a few sheep in”.
And what about the poor cousin goats? Remember when it was a way for the local footy team to make some money for the end of year trip. Now at 1030c/kg they are gold-plated and when a mob is found, everything else stops – even the muster for shearing.
I saw the result of an organised fox hunt in Hay the other day. Over 100 foxes and many of them where big, old foxes. (100 x 5 lambs each @ $160 or more, work that out.) When stationed at Eudunda in the 90’s these were a regular occurrence and a great day with a positive outcome. It is well worth the effort to organise in conjunction with baiting. It really knocks a hole in the population and has a big impact on the lambing percentage.
What were the opportunities spoken of earlier in the year? Merino ewes, improver lambs, light cattle (heifers) and plain cows or steers that you can hang some weight on and resell.
All of these have shown a significant three-month trading margin, with signs there is still a little bit of upside left, dependant on more rain. PTIC/SIL females are still an opportunity for the longer term trade.
That sorts out what has already happened. Now it is time to look at what you are going to do towards the next sell off.
Southern lambs and calves are on the ground and making the most of a potentially low marking percentage is of the utmost importance.
As an agent I have heard time and again around July “We have enough feed. I will keep them and put some more weight on”.
Rule of thumb in southern Australia is mutton prices will start to ease in mid-August on the back of the agricultural shearing.
Lamb and feeder cattle prices start to soften in the second week of September. Saleable numbers will be affected by the drought but the trend will remain similar in most years.
The cross over between positive weight gain and price return is often ignored in grassed based operations although feed lotters are very aware of it.
Using the above time frames a simple calculation based on your business and traditional sale time may help you understand the value of taking the time to work it out. If done correctly this will also free up more feed for your breeders or allow a short term trading opportunity, both of which should lift your end of year returns.
Example only – pricing is not based on market expectations.
400kg steer @ $3.20 = $1280. Or keep him for another 4 weeks @1.2kg /day = 433kg @ $2.90 = $1257
20kg drs lamb @$8.00 = $160 + skin. Keep for 3 weeks = 24 x $6.70 = $160.80 + skin.
Every operation and area is different so the timing will be different in Ballarat to what it is in Cleve yet the underlying drivers are the same specific to your area.
Jono Spence from Spence Dix & Co at Keith, made mention that May has been typically volatile. Anyone with weight in cows, feedlot lambs and cattle or mutton has been very well rewarded.
Although, much the same as Qld and NSW, light cattle, especially heifers are very good buying if anyone has the feed.
Naracoorte store cattle sale went against trend by yarding 1600 when normally May would be 500 and the market lifted.
Jono reiterated what I have heard from many in rural Australia since election Sunday: “the election result was unexpected and seemed to make everything feel a bit better – even though Keith lost the football”.
One good thing about the election win is the ability for a rational thought process to continue with the live export trade.
All aspects of the livestock industry have a place and we must remember “the customer is always right”.
If our trading partners want chilled, frozen, live or blue with a ribbon we need to provide the article that stops them looking elsewhere in the world.
I was an agent with the early 90’s trade collapse and involved in supply management for the 2012 halt on sheep under the introduction of ESCAS.
Both times we saw a significant correction in the prices of sheep. 2012 was in the range of $25 per head based on the reporting I had available to me.
For those pastoral areas that did get a rain and have feed, agistment has always been the fall back to create cash flow.
Don’t overlook the opportunity to buy some SIL (scanned in lamb) ewes, wethers or light cattle and create another opportunity for your business.
It’s all about getting the most heads for the lowest spend. If the feed rolls on you already have a head start for the restock.
The finance options available for livestock are a lot more flexible now than in the past.
What if we did this instead of that….
As we all know it is easy to make forecast comment on how the livestock season may run, but rarely do we reflect on whether the advice, if opportunity arose, would have delivered a positive outcome.
Long range weather forecasting does spring to mind. The seasonal conditions have been against many taking opportunity; however this does not tend to alter the year on year trend graphs.
Whether you look at the indicators in Beef and Sheep Central, on the back of the various rural papers or use the MLA site, it is well worth studying the cyclic trends on what you are selling. Seasonal conditions tend to move the trend line either forward (dry) or backwards (rain) by 4 – 6 weeks. Supply change because of this moves the price line up and down.
As I have commented since starting these articles looking at the trend graphs and planning around them can make a significant difference to your returns. None of the above is “a secret” and the information and experience sits with all involved in the livestock industry including the producer.
In some operations, being prepared to look and change some traditional sale thought process is a great way to unlock the true potential. This includes your finance discussions – many producers are tied to what will fit into a cropping program overdraft, often not much is left. Whereas short term, livestock specific finance may provide opportunity and a chance to lift productivity.
Creating an additional trading margin on top of your normal turnoff by utilising feed availability or undervalued grain supply combined with understanding the above trends. Then leveraging the relationship with your agent/processor/feedlot/exporter to create forward contracts.
Making more off the same property sometimes only needs the time to think about “what if we did this instead of that?”
Cattle
The cattle market has been very difficult to pick with the young cattle having a lift end of April only to ease off all through May.
The lighter store types have become progressively harder and harder to place. This was reflected by conversations I had last week with the Dalby and Roma agents. “Small cattle are hard to place.”
The indicators across most cattle types are showing the south is a little behind the Northern pricing if you take the random rain events out.
Plain cows are also becoming increasingly hard to place yet do provide an opportunity on a short term “feed and freshen” if a bit of feedlot space is spare.
Just remember the old girls know how to eat. The arrival of rain in the deep south has lifted enquiry but still based on quality and not a general lift over all types.
David Setches from Alex Scott and staff, Pakenham said the last two weeks of May saw rains arrive but there is still no sub soil moisture profile.
Very cold now with limited pasture growth starting from a bare paddock situation. Improved pastures have created some better growth for those with them.
Many of the Gippsland producers have been unloading heavy cattle to take advantage of the prices with feed lots being the saviours during a difficult time. 400–500 feeders last week making $3.10 – $3.20 with classy feeders making a bit more.
David has noticed some of the feeder weights are starting to fall as well to find supply.
Big store sales for Leongatha with last three having 5000 head and Pakenham consistently 3000.
David said: “It seems those selling are only replacing with 50pc of normal numbers as there is no hay left. The plan is to leave paddocks locked up to replenish hay supplies in the spring then assess the opportunities.”
Bruce Cameron is the Northern SA cattle coordinator for Elders and gave me a good five minute summary whilst heading towards the Hawker Races. Adelaide Hills still tight for feed with many unloading as out of hay. Alice Springs moving plenty of cattle and are still coming out in good to forward store condition. Weaners are okay and worth a shot if you can handle some. Hawke Maree and bottom of the Birdsville track are very tight and either down to last numbers or stock headed away for feed. Top end of the track has received channel floods and rain and looks good with a tidy body of feed.
Peter Cabot, Landmark Wagga said the cow sell down has been a third of the yarding for 8 months and most of the Riverina herds if not completely sold out are under 6 years of age. Weaners have become increasingly difficult to place also with hay reserves exhausted and the recent 25 – 50 mm painting the country green but no body of feed as starting with bare ground.”
My reports coming out of Queensland indicate the same pressure on light weaner cattle prices there also.
Opportunities
Still PTIC / SIL females
Lambs, but target sale is end of July
Pastoral – 2th wths {or older), create cash flow in pastoral areas that have received a rain
Light heifers 150 – 200kg
Ewes, with lamb at foot carrying 4- 6 months wool
Tradeable cows
Plain steers with frame
HAVE YOUR SAY