PUTTING extra weight on to steers to help offset their high cost as store weaners may not prove so successful this year.
This is due to an increase in heavy cattle numbers and the floundering export market to Asia.
Already this winter at Victorian saleyards the price difference between a yearling steer (weighing less than 400kg) and a bullock (500-600kg) has ballooned out to more than 40 cents per kilogram liveweight.
It is easily the biggest price gap seen between the two weight grades during winter for the past five years, according to figures from the National Livestock Reporting Service.
Currently the Victorian price indicator for yearling steers, 330-400kg and in fat-score three condition, is 219.3c/kg liveweight. In comparison, the price indicator for Japanese bullocks, 500-600kg and fat-score four, is 178.6c/kg; a difference of 41c/kg.
And the trend looks likely to continue, judging by results from this week's early markets, such as Wagga Wagga on Monday, where quality trade cattle were quoted up to 12c/kg dearer but bullocks were 3c to 4c/kg cheaper.
This time last year the price difference between yearlings and bullocks was just 5c/kg, and in July 2009 and 2008 just 3c and 7c/kg respectively.
Supply and demand is the issue. Figures show a much bigger pool of heavier cattle compared with young lighterweights at a time when processors are struggling to sell meat for decent money into Japan and Korea.
During June the number of yearling steers, weighing less than 400kg, that went through Victoria's key weekly prime markets totalled just 1029 head - half the number sold during the same month last year.
In comparison the number of heavy steers going through saleyards has barely changed: 5044 bullocks (500-750kg) were sold through Victorian saleyards in June, compared with 5426 head 12 months ago.
In effect, the slowdown in prime cattle numbers is not nearly as pronounced in the heavier weight categories compared with the lighter domestic grades. The good season, and farmers' putting extra weight on animals in an attempt to recover their costs, are key reasons for the trend.
But should the trading of heavy steers at such a discount be taken as a warning for store buyers not to get carried away and pay big liveweight prices for young replacement stock this spring?
Prices at the Wodonga store sale last week were exceptionally good for weaners when compared with current returns for export slaughter cattle. Heavier steers averaged around 215c to 220c/kg, and smaller calves out to 250c to 270c/kg.
Taking note of the strength of the market for store cattle was NSW breeder Colin Parker of Glencoe at Holbrook, who opted to sell more than 100 of the family's Hicks red Composite calves, aged 10-11 months. Premiums available for store cattle made it difficult to justify carrying them onto feedlot weights, he said.
"Usually we take these calves onto 400-450kg for the feedlots, but I just couldn't see how we were going to get a big price increase by doing that, as you are looking at about 195c/kg to the feedlots," he said. "To sell them today as stores for 220c/kg looks the better value to me."
Walwa producer Ace Coughlan paid the top price of $765 for the lead draft of the Glencoe composite steers that weighed 353kg, representing 216c/kg. They will be grown out for 12 months on grass.
Mr Coughlan said the weaners were cheaper than earlier in the year when he had to pay $875 or 280c/kg for 312kg calves. But then he did note that bullock prices had also eased, which meant in real terms his trading position hadn't changed much.
"The same week we cleared bullocks for over $1200, whereas now we are getting a bit over $1000, so it is all relative," he said. It reinforces the point that store cattle tracked well above prime beef rates in the summer and autumn, and they are still too dear now for what the export market is offering for heavy slaughter cattle.
While there is already talk about grass fever in the spring and the potential shortage of store stock, farmers shouldn't get carried away - especially if the discounting of bullocks means extra weight gain might not be enough to enable you to trade out of an expensive calf.
Fuente: Jenny Kelly