Weight of Beef Cattle at Slaughter
THERE'S an one-time maxim that financially, Australian lotfeeders can tolerate high feedgrain prices or loftier feeder cattle prices – but not both at the same fourth dimension.
That adage is being tested at present, with both inputs sitting at record, or at to the lowest degree uncomfortably high levels.
A large Queensland feedlot operator told Beefiness Central Fundamental yesterday that, having bought his yard's final feed barley consignment at $405/t delivered, the market yesterday (postal service India's announcement over withdrawing its grain exports) was $485-490/t.
"I've never seen anything like it, in my time in the industry. Extreme loftier feedgrain prices, at the same time every bit two or three good growing seasons in a row, and very expensive feeder cattle prices."
"It's at the crossroads now, as to whether lotfeeders kickoff closing-down pens, because of the losses involved. I spoke to a smaller opportunity lotfeeder yesterday who has the feeder cattle on hand, and has the grain on hand to feed them. Only he is talking almost selling the cattle as feeders and selling the grain, into the market. And he would not be the only one having that chat," the lotfeeder said.
While there are pockets of grainfed cattle business organization in the market that are all the same better than others, from a broader industry perspective, conditions at the moment for lotfeeders are extremely difficult, a large supply chain manager told Beef Central yesterday.
Feedgrain prices have now shifted $150 to $200/t since the Ukraine War bankrupt out, and the trend has only redoubled since India's weekend ban on its ain wheat exports, pushing the global wheat consign estimates 8.v 1000000 tonnes lower. Local feedgrain prices had risen another $10-$15/t since Tuesday, i contact said. Meet Fri's weekly Feedgrain Focus report.
What's fabricated this feedgrain price bike unique is that it has come at a time of abundant supply. Ordinarily, skyrocketing feedgrain prices in Australia have been associated with drought and short supply – often with grain existence shifted north and east beyond the continent from other locations past ship.
SFW wheat delivered Downs yesterday was quoted at $480/t, at a time when at that place is arguably more grain in the country that has ever been seen. Back in late February Brisbane SFW was quoted at $345/t.
Bailiwick to each feedlot'due south own position on grain, movements like this are putting some yards in an extremely difficult position, i contact said. Prior to the Ukraine conflict, at that place was no great motivation for yards to secure unusually big forward grain stocks.
"Even for those who had a larger position around harvest, apace that gets absorbed, when the market moves as far and every bit suddenly as it has recently," he said.
While some yards evidently moved on securing grain soon afterward the Ukraine conflict started, due to perceived price risk, others did not answer to the aforementioned extent.
"Some went particularly hard, and got significant cover, and while they might exist relatively amend off than others, the fact the market has moved and so far, and then soon, has lost a lot of that reward," the trade source said.
"The liquidity in the marketplace at present, combined with the logistical issues, is making information technology very difficult for all lotfeeders at present," he said.
Ration prices surge
The extreme shift in feedgrain value has inevitably pushed feedlot mixed ration prices sharply higher, although they still lag somewhat, Beef Primal was told.
Commercial Darling Downs yards this week accept ration toll offers at between $400/t and $430/t, depending on the one thousand, ingredients and grain processing organisation. That has been insulated somewhat by more competitive cottonseed values, and reduced roughage values this yr for both silage and hay.
"Information technology'due south fair to say that current ration prices do non yet reflect the full extent of grain price movements," ane supply chain stakeholder said. "In that location's potentially more to come – the total extent has non yet been factored in, because they are using grain bought earlier."
Looking back, pre-Ukraine invasion, some southern Queensland yards were quoting ration price at around $360/t. Those ration prices could well rising to plus-$450/t in the non also distant future, once current grain prices are included, he said.
"But for a thousand building a ration based on today's spot feedgrain prices, it takes the finished ration price of more than $500/tonne. That's unprecedented," the contact said.
Downs feedlot ration prices quoted by Beefiness Central but once before got to $490/t, which happened several times between July 2018 and March 2019, during the midst of the drought grain shortage.
The difference so was, that cost of gain during that era was around 350c/kg, with a steer purchase price averaging 304c/kg and a finished 100-day grainfed bullock price of 680c/kg dressed weight. If rations get to $500/t every bit predicted, COG volition got to effectually 375-385c/kg.
Feeder prices
Compounding electric current financial challenges for lotfeeders is that flatback feeder steers 450kg liveweight are today making around 535-540c/kg, with Angus equivalent around 640c.
At its superlative earlier this twelvemonth, flatback heavy feeders were briefly making around 580c/kg, but while there has been a 50c/kg turn down since then, prices are still extraordinarily high, past historical standards.
It'southward that strong combination of record high grain and ration price, and persistently high feeder steer cost which is impacting heavily on lotfeeders' numbers at present.
Finished cattle price
The but other significant variable that tin can ease the financial brunt is the finished grainfed bullock toll.
Electric current forward pricing for export grainfed ox (generic cattle, not Angus brand programs or Wagyu) amid grainfed processors in Queensland is already at all-time record highs, around 840-880c/kg, for July-August commitment. That's upwards around 50c/kg since the start of the year.
But despite that lift in inducement, it does no go close to roofing the massive and growing cost brunt driven by record feedgrain and high feeder prices, Beef Cardinal was told.
Net losses remain in 'serious negative territory' on the merchandise of buying a feeder steer, getting him fed in a typical custom feedyard, and selling him as a finished bullock after 105 days on feed. Electric current grain positions held past each thou would have some bearing on that, Beef Primal was told.
"It's been particularly tough trading for a lot of lotfeeders for the by 12 months, and contempo developments are only making it worse," i contact said.
Does it accomplish a betoken where some lotfeeders start pulling dorsum on numbers?
"I call back there has already been a bit of that," the contact said.
"Some have been pulling back, while others take been rolling with it – depending on how their business is structured, market access, and the markets they service."
The Australian Lot Feeders Clan's quarterly survey of feedlot numbers for the March quarter is due out Monday, merely it will comport some lag, and may struggle to reflect the more serious change in dynamics that has happened since April.
So is it likely that feeder prices may have to driblet in coming months, given recent rain, to ease some of the price pain being borne by lotfeeders – specially if numbers on feed first to recede?
Several contacts felt prices would come up under some pressure level through winter, but offsetting that, currency movements working in Australian grainfed beef exporters favour in recent months (back 10pc since March, worth around 40c/kg dressed weight, or $132/head) may provide some buffer.
- Tomorrow: Angus feeder steer premium blows out to $i/kg liveweight – What's behind it?
Source: https://www.beefcentral.com/lotfeeding/lotfeeders-buckling-under-weight-of-record-high-feedgrain-and-feeder-cattle-prices/
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