Chris Howie: Season changes and pricing follows
April is seen as change of season in many areas. The sting goes out of the weather in the south and the humidity starts to fall away in the north.
It is also a time of flat tracking prices. Processors and feedlots are trying to secure numbers going into winter at summer prices.
As the season has changed so has the feel around pricing. I am certain sheep, lamb and cattle prices have bottomed (goats I’m not too sure about). The sale dynamics have definitely changed in the last seven days. Buyers are taking the offering at the current rate without trying to pull the job back further. Some deals are starting to be cut to secure numbers and the demand for the two base-level red meats – cow and mutton – are firm to better, with mutton definitely leading the way from the very low levels of December.
Carbon – this used to be the stuff that filled your exhaust pipe up if you drove the old ute with the choke on. It came out of the tractor smoke stack when your injectors were stuffed. I am not going to try to explain how this system works but I am going to give you a couple of thoughts.
- Get your property carbon footprint assessed sooner rather than later so you can establish a base line. In the future this number will either give you access or exclude you from markets – meat, fibre, grain. This number will be the next “non – tariff” hurdle placed by importing countries.
- Over the past 10 years technology on your property has allowed you to create dramatic efficiencies e.g. Farm Bot removing the need to have a trainee on a motorbike checking water 3 days a week or GPS farming saving you 1000 acres of over sow when cropping.
You must incorporate these savings into your carbon plan – don’t waste what you have done already.
MLA have set up and just released two excellent carbon mapping tools. As with everything new the first time takes work, but I firmly believe this work will pay off looking forward.
Across the board secondary lambs and sheep continue to struggle. However, the price variance is still significant when comparing different areas of Victoria and NSW. It is well worth doing the homework and assessing extra freight may well pay in the long run.
I went to Wagga last Thursday and saw an excellent run of heavy lambs and mutton which sold to very solid competition from all processors. The winners on the day were old ewes with good cover and a bit of wool ranging from $120 – $150. Secondary and immature lamb buyers are still limited but the rain will change this very quickly.
Speaking to agents in the North of NSW sheep and lamb prices are struggling with limited processor competition leaving prices relatively flat.
James Tierney and Tim Drum from RLA, Wagga said they are starting to get enquiry about available numbers and quality from processors which is normal for this time of the year and is starting to reward those that have “timed their run” for after the Easter break.
Lambing ewes: Don’t forget about the girls at the most important time of the year. Get some advice from a good Livestock Production Advisor (LPA) and supplementary feed with some lick to give them the energy to get both lambs on the ground alive. We love blaming weather, foxes and eagles, but the truth is what you do to support your pregnant ewes is the biggest impact on how many lambs are running around at marking time. Even if an agency doesn’t have an LPA, find a good one and introduce them to your clients.
Pink eye in sheep and lambs: April is the time of the year this arrives with a vengeance. Feedlots, saleyards and loading for delivery on a private sale are the main impacts. “Last night they were fine, this morning as the truck pulls in and pink eye has ripped through them.” They won’t die but it is well worth making a phone call to the buyer and maybe delaying delivery for 14 days to avoid a shit fight later.
Wool: I am seriously concerned about the number of hard-core Merino wool growers who have had enough and are now exiting sheep all together or changing to shedding sheep or cattle.
The last 12 months have been very hard with rain, fly, black water and shearing teams pulling the pin a week out from start times. I understand supply and demand drives price but there use to be a moral obligation to take a person’s word as good enough in rural Australia. I hope the next 12 months bring some sense back into the shearing industry with easier access to staff allowing sheep to be shorn without any hiccups.
WA live sheep export: Information supplied by “Industry” seems to be the political term to make decisions without fact. The continued push to delete live export of sheep from Australia does not seem to be based on any commercial financial data from WA.
Speaking to a significant sheep producer in WA last week, he said an associate of his is involved with producing feed pellets for live export. To give you a brief summary of the impact, gross turnover was in excess of $40m last financial year and is now expected to be $20m, without factoring the effect on staff employment, transport companies to move the product in and out as well as the primary producers providing the grain and fodder. No one from “industry” has asked his business for any business impact information related to supply to the live sheep exporters.
Combine this with the direct impact on the physical price of sheep and lambs in WA which is at least 80c to 100c per kilogram behind the East. Do your own sums using an average weight of 22kg dressed to do that calculation on the lost margin as well as agency commission, inputs and farmers exiting all together from the sheep industry x 14 million sheep as a starting point.
And finally – Kuwait, a long-term trading partner of Australia asking why they cannot continue to have Australian sheep? Do not believe for one minute the cancelation of this valued industry will be the end of the push – live cattle export and then domestic road transport will follow.
Up until this week I thought the cattle market had fallen through where its base level should have been. Feedlot exit prices have been significantly down, forward contracts are based on the last three months and well down however spot market is showing positive signs.
The EYCI has gained some positive numbers after recent rain, however, my barometer is what the weaner sales and cow job is doing that are not included in the ECYI.
Traditionally cows at this time of year are plentiful yet the prices have held and seem to be bubbling enough to show signs of a potential lift in May, if not earlier, with some of the chats I have overheard.
CL Squires, Robbie Block at Inverell saw increased competition at Thursday’s feature sale as did the Cooma and Gunnedah offerings with weaner heifers gaining 20–60 cents per kg from several weeks ago. Many are now making $3.40 – $3.80 equivalent. Weaner steers have shifted from mid $3 to be averaging just above $4 and the lighter models at Cooma pushing $5.
Carcoar loaded 7600 calves last Thursday and Andrew Bickford, Elders Bathurst manager said the 100mm of rain really injected some spark into the buyers for this outstanding yarding. Compared to the previous week’s sales steer prices lifted $100 and heifers $150 – $200. Steer rates ranged between $4.30 – $5 and a bit.
Will and Vanessa Dixon, Monaro Livestock and Property, Cooma will fire on Wednesday 5th of April with 2500 predominately 6 – 10 month old calves with the ideal weights between 250 and 320kg. It is great to see the Monaro in such good heart and the years of genetic investment is really shining this year.
Ron Rutledge, Vic / Riv Livestock for Nutrien said the demand for females has gone from very sad to F1 in a week on the back of the ideal rains across his area. Quality sells and an offering of 1750 Angus Females by TRT Pastoral in Victoria and Tasmania on Auctions Plus on the 14th April will really provide a great trade out of older cows to replace with these top-notch young ladies.
Having a beer with Bill Jennings also from the Nutrien stables Paull and Scollard, Corryong. He deals with many producers up in the high country and Murray valleys, said his repeat buyers are paying for quality. Bill is especially targeting producers with calves that turn into quality bullocks. I saw some of these bullocks being loaded early this year that dressed at 411kg. “Paying a little extra for weight and quality really makes a difference” Bill said.
2022 cattle trades: This is the elephant in the room and the shortfalls are significant with many difficult conversations being had. If averaged over the three-year spread most traders are well in front, although no one likes to make a loss.
It is important to look at what the options are and assess if selling down last years trade and buying back in at a reduced rate is an option. Cash settling or paying interest on the shortfall maybe a more cost-effective option than continuing to feed expensive cattle in hope the market will allow you to break even.
US market: Prices are on the move and supply numbers are falling after the extended drought. What does this mean for us?
- Currently Australian feedlots are exiting a very expensive inventory into a depressed market. In turn the losses are significant. How ever they are replacing this inventory with much cheaper cattle and a softening feed price.
- In the US they are now selling a very cheap inventory (like we did in 2019 / 2020) and selling into a rising market. As well as paying higher dollars per pound for replacements.
If we look at a 130 feed time for exit of the US feedlot inventory I think we may see some form of price rally for Australia in about 100 days time – mid July. I might be wrong and some may disagree but I suppose we can square up in mid-August with a couple of cartons of beer.
The ALPA Young Auctioneers Competition: This competition is on this Thursday at the Sydney Royal. Young agents from all over Australia will compete for the National title and a chance to sell in Canada. It is a great event and well worth seeing. For those aspiring auctioneers that couldn’t get in just remember: “being an A grade agent does not hinge on how well you can sell, it is how well you service your clients, leverage networks and provide marketing options.”
Change of jobs: After four terrific years with StockCo 100% Livestock Finance dealing directly with the Australian private agency industry I have accepted the role of General Manager for the RMA network.
RMA Network supports independent Stock and Station agencies all over Australia with network marketing and insurance. A fantastic business foundation is in place to develop further tools for membership agencies to use for the benefit of their clients and buyers. I will continue with StockCo until late May and remain focused on delivery of product advice to StockCo customers.
Thought for the month: If we spent as much time fixing stuff as we did putting signs up to warn stupid people Australia would be screaming ahead at 100 miles per hour. I think we need to bring back natural selection for the betterment of all of us.
Light condition old ewes and cows – but check the mouths
SIL and PTIC females
Getting your operation carbon footprint assessed
When selling / buying livestock get a signed contract
Get your livestock trading finance organized.
Look after your lambing / calving females with supplementary feeding and dry lick.
- ^ carbon mapping tools. (www.mla.com.au)