Prime talk: Price anticipation

As everyone is well aware, it has not rained in the north, and northern competition is vital to all of the weaner sales occurring throughout January.

As northern competition did not eventuate at Wodonga, prices were lower than last year.

While this is not good for producers, buyers can again purchase replacement stock at like-for-like prices.

There are a couple of positives that can be gleaned from the opening of the 2014 selling season.

The first is that a lot of the cattle sold carried better weight than the previous year and the dollar values were not too bad.

The second is producers who have sold recently, or plan to sell in the near future, can replace their stock with a liveweight price relevant to their sale price.

This should be a good incentive to turn over stock if the time is right.

Some producers are making a concerted effort to improve their income by becoming EU accredited.

While the price advantage was only minor at Wodonga (2-5 cents a kilogram), stronger demand in the early Western District sales from export processor Thomas Food Industries (TFI) saw premiums of up to 8c/kg liveweight given.

Many people expect a price improvement in 2014 so the question is: "What can influence higher prices?"

The standout answer is "competition", which will be created by weakening supply.

As 2014 begins, ships are ready to service the increase in supply to Indonesia, which is quoted as 700,000 head this year.

This doubling in number will take away cattle from eventual processing in the north.

Couple this with the large slaughter of female cattle, poor conception rates and general livestock deaths from the continuing drought, and demand has to improve.

Unfortunately, I have also been told that when JBS's Dinmore (Queensland) processing plant re-opens in January, they will be operating on one shift a day, not two.

This may negate some need for supply, but Australia is a big country that still needs to feed its population and fill increasing export orders.

The recently signed live shipping contract for Angus steers to Russia, reported to be more than 35,000 head, should also be considered a positive.

However, supply will determine the early outcome.

January and February will undoubtedly be busy, with prime cattle sales in these two months generally the busiest.

A conversation with a northern agent suggested conception rates were poor, based on his personal experience with poor pregnancy testing results.

This could be attributed to very dry conditions in the north, equally cold and wet conditions in parts of Victoria and the South East of South Australia, and a lack of calves on the ground will create future lack of supply.

This did not seem to be the case at the first two days of the Wodonga weaner sales, which were well supplied due in part to the dry season.

However, the Western District sales are being quoted as the smallest for many years, with producers holding over the younger and lighter-weight steers and heifers.

This is due to a late but good season and the opportunity to add value by improving the weight of the cattle.

For Western District producers, there is the chance to bring Angus steers up to a weight suitable for the live shipping order which will be filled in March.

Generally there is a good feel about the future but it's essential to be in it to enjoy it.