Chris Howie from Agri Careers and Consultancy offers his perspective on southern livestock market trends, 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.
Strategies ahead of autumn and winter
HERE we are lined up for another year and already a month in. Been a bit happening over the last two months as we all know and looking at what we should be doing has taken a bit of a back seat.
At least we have seen some storms across most states that give all hope it still knows how to rain, and hopefully the rain continues in Far North Queensland.
Many will be looking towards livestock purchases for trading or restocking as we lead towards autumn and into winter.
Any form of rain will multiply the demand and this often allows the quality of stock purchased to drop in fear of missing out – “grass fever” in agency terms.
Even though many areas have been significantly impacted through drought or fire we will still see sale stock being offered as part of normal sale programs specific to individual producers.
‘Bugs in their guts’
I called Elders livestock production manager Rob Inglis and asked him to provide me with some science in layman’s terms on how to get the best out of livestock purchases.
For those buying over the next three months, it is vital you understand how to acclimatise livestock, especially from pastoral areas.
“Bugs in their guts” must match the feed on offer. When buying pastoral/ drought and fire effected sheep or cattle, the rumen mix has often been compromised and will not handle inside country pasture/feedlot conversion efficiently. This means stock purchased do not perform to expectation. However with a bit of low cost science giving these animals a “bio start” is like adding Aerostart to the old International 554 tractor – Away they go…
Rob’s notes:
The rumen is, for all intents and purposes, a fermentation vat. Fermentation is nature’s way of converting something we (humans) can’t digest into something we can. In the case of ruminant livestock – turning plants into protein (meat, milk and wool) and fat.
A healthy rumen contains billions of microorganisms (bugs), including numerous species of bacteria, protozoa, fungi. Given the requisite ingredients and favourable conditions, these microorganisms multiply, at an astonishing rate. This process (fermentation) produces volatile fatty acids, from which the animal derives a significant quantity of its energy requirements, and microbial protein (dead bugs). This microbial protein provides the lion’s share of the animal’s protein requirements. More protein means more meat, milk and wool.
The principal energy or fuel source for the aforementioned bugs is carbohydrate, and as mentioned, if added to a healthy rumen, will elicit a rapid response, however if the bug population is compromised, as a result of nutritional stress, the response will be very slow. Unfortunately, many of the livestock coming out of drought affected areas, have been under nutritional stress and are or will be suffering what I would describe as “rumen inertia”
On the bright side there are protocols and products which, where applied correctly, can correct this rumen inertia, and significantly reduce the time taken to recover, and reach full production.
I first tried this with pastoral sheep from Northern SA and early weaned calves we purchased from Qld in the early 2000’s. From these experiences and more that followed the results are outstanding when applied yet many continue to ignore the benefit created because of the extra work or cost. At worst make your own enquiries and perhaps run a trial on a selected purchase to compare the outcomes.
State of the season across eastern Australia
Further north, I have spoken to a spread of agents since Christmas to get a feel for what is happening around the place.
Recent rains especially in Queensland have seen immediate price responses as reported in previous Beef Central and Sheep Central articles.
If your property is under the cloud it is a good start but still a lot of gaps to fill in yet.
Southern Queensland and the New England also caught rains with some significant falls in the New England and out into the western division.
The lamb and calf numbers through these areas have been drastically impacted and will create a supply hole from March till June.
Spring lambing/calving pattern vs the southern autumn pattern.
These areas are starting from a long way behind and the moisture profile is non-existent with it hard to see where 50mm fell.
There are some green tinged areas through central NSW but the dust storm through Dubbo 12 days ago was a cracker with wind and heat still constant.
The Riverina is a mixed bag and summer rains as with most of the south tend to ruin dry feed and it is still too early unless it continues to rain for an extended time.
However ground water is drastically short in many areas and storms are good for dams.
The feed situation and quality of stock through the Western districts and Sth East of South Australia is very good but quality of feed does tend to fall away quickly after the January long weekend.
Tassie report: Speaking to George Shea, who has a property “Lyndall” in the Derwent Valley and does some Ag consulting. The East coast has been very dry for three years, much the same as NSW. Last week there was 20 – 50mm state wide with that week’s store cattle sale lifting as the day went on with water running down the lanes. Cattle prices have remained solid however light condition lambs and sheep have been heavily discounted. Trade mutton and lambs have remained steady with mainland competition. Very hot weather, up to 40 degrees is forecast and will put pressure on the grass that has germinated but hopefully the next change will allow it to pull through and keep going.
Cattle
The rain mid January saw A+ 240 – 260kg heifers in Qld jump from low $2 to $3 overnight and well-bred angus calves around 140 kg make well over $4 in the NSW southern table lands.
Rain pricing response is measured in hours not days.
Trade cattle stayed relatively soft over the January period with grid prices fluctuating 10 – 30 cents on most types. Good cows late December did come under $2.00 for a couple of weeks in some locations with many processors 3 – 4 weeks out and supply being driven by the next destock and the Christmas mas break disrupting two weeks of kill space. Again, any rain is showing an immediate price response as supply slows.
The traditional weaner producers who sold heavy calves pre Christmas gained a cents per kilo benefit before it eased.
The Wodonga early sales had the extra strain of significant fires in the mountains which saw prices solid but without a lot of top end. This quickly rectified as the sale calendar progressed. The Western district and Sth East of SA sales started well with most steers ranging between $3.10 – $$3.30. Heifers were buyable with plenty of quality on offer from $2.60 – $2.95.
The EU component performed very well with a strong Northern NSW order setting the pace early, prices ranging from $3.30 – $3.43 As expected calves presented very well with some excellent weight in the top end and those well weaned eagerly sought by feedlotters and repeat backgrounders.
EU – why so few properties accredited?
EU has been a topic for many years yet it surprises me how few producers have accredited their properties. I understand the end price fluctuates and it is no guarantee of a better weaner/feeder price however this year it did provide a return.
I am not an economist but I think the UK leaving the EU may well provide supply opportunities moving forward.
Supply and demand rules will definitely come into play at some point this year. Feedlots aligned to the EU need supply and considering available numbers becoming accredited sounds like a good idea. Especially if your numbers are currently down due to season, it makes the process easier to complete.
Having extra strings in your supply bow are very important from genetics suppliers all the way to retail end user. Significant price impacts over the last 15 years with wool, iron ore, grain, dairy heifers, milk solids, meat, live export and this week crayfish to name a few have all been severely impacted because of a supply concentration into a single market.
Concentration of end users allows market influence simply by setting a high price to create supply demand which drives producer’s to capital spend and improve production systems. Once this has gained momentum turning off demand leaves producers and exporters exposed and forces locking into lower price contracts. Having the ability to redirect, even if at a lower price allows you time to investigate options verses negotiating in desperation.
Supplying China is the buzz word for many however it is easy to become excited without understanding the complexity of the trade. As we saw before Christmas some contracts were not honoured with product left hanging. Many plants have applied for Chinese licence and completed inspections but have not yet received the required export certification allowing them to operate in the Chinese market. I do not have insight into why but it would be frustrating for those processors. The corona virus will have some impact yet to be seen.
Sheep and lambs
The lamb feed lot industry is set to have its break-out year.
The number of new and upgraded lots, introduction of technology management systems, pellet development, feeding systems, nutrition understanding and smart supply arrangements is no longer a dry time mitigation exercise.
Producers are now utilising dry time learnings to improve productivity which in turn will provide continuity of supply for processors and demand for breeders.
This may also start to even out the supply shortage price bumps.
Those that took the chance on the under 30kg store lambs pre Christmas are now in an excellent position with well-priced lambs ready for the next step. Many put them on a maintenance ration to keep them rolling along, gaining weight through bone growth not fattening them. The entry of these lambs into feed over the next month looks like a positive outcome in a few months’ time. Don’t be scared to polish up the old ewes either. Much the same as a lot feeding cows, they eat a lot but if you are holding them to potentially offer as SIL ewes closer to April this would be smart business. Don’t feed to fatten them, feed to freshen them.
It did surprise me how many lambs were left to spot market when we did see a number of circa $8 and a bit contracts available in early November. Prices are still solid ranging between $7.20 – $7.60 although skins have very little value at this time. Looking forward I would suggest keeping your preferred agent and processors up to date on what lambs you have on feed and when they will become available. Often small windows of opportunity appear because another producers’ lambs were not quite ready and this creates a hole. Picking up the odd sneaky win puts a nice little lift in the overall average.
The annual Deniliquin sale in late January shows the demand for Merinos is still as strong as ever with preparation and presentation paying dividends. Many of the South Australian pastoral shearings will start from this week on with a progressive movement of surplus lambs and ewes coming onto the market. I will add one caveat – with the reduced numbers any form of significant rain will see stations retain as many as possible to lift their numbers. This will create a reasonably large supply hole also. There are already several merino ewe orders that have appeared in the Western division of NSW ranging from 5,000 to 20,000. If you are in the market and have feed buy early.
Whether sheep, lambs or cattle – get your finances in order now to avoid delays costing you time and money on a rising market. It is the easiest part of the process to get done early and have waiting.
MLA MIA on Australia Day
MLA lamb advert missing in action. I was disappointed with what has become part of Australia day culture was missing in action this year. I listened to the ABC interview about why it was not continuing in its same format – “wider spread of time and engagement, underlying concern about “the date”, cultural change and expectations around advertising acceptance”. Instead of people talking at BBQ’s about “the ad” and “how good lamb is” the conversations I heard and had relayed to me were “Where is the lamb add? Where is Sam? Lamb was too dear to buy” Positive messaging and humour removes the price resistance. Having lamb on the barbie is viewed as the right thing to do. We were told at many conferences the roll-on benefits last 6 weeks after Australian day for lamb. No doubt there are now exit polls and surveys that prove this wrong. It is a pity that we play with things that aren’t broken and start listening to the squeaky minorities. I have never seen as many Australian flags driving from Renmark to Adelaide as I saw this weekend. If each of those flags had purchased some lamb it was a good day for the industry. I think that must say something.
Opportunities.
· Cows and calves to split
· Cattle with frame but lacking condition
· Pastoral merino ewes
· Pastoral merino weaners
o All correctly cared for.
· Sheep with 6 months skin
· Spring drop lambs to supply into the winter months
· EU accreditation
· 2019 wine – no smoke taint
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