LOT feeders are looking to keep cattle on feed for longer to both offset skyrocketing stock costs and make the most of lower grain prices.
Many have dropped the sweet spot on grids to reflect the fact they are chasing lighter cattle.
Prices for 300 to 420 kilogram feeders have lifted ten per cent since June and are now averaging around 378 cents per kilogram liveweight.
Operator of Gundamain Feedlot at Eugowra and president of the Australian Lot Feeders’ Association (ALFA) Tess Herbert said the lower cost of gain was driving the trend.
The fact there was also grass in paddocks was playing a role, she said.
“A lot of these lighter cattle are going into backgrounding programs first,” Ms Herbert said.
“Feedlots often own their own backgrounding enterprises and where they don’t, they are agisting.”
The heavier cattle were being bought by processors so it was a neat fit, she said.
Despite the meteoric rise in cattle prices, numbers of cattle on feed are holding steady.
The ALFA/Meat Livestock Australia June quarterly survey shows only a .43 per cent decrease, with 910,967 head on feed.
Queensland and Victoria actually had a very slight increase from the March quarter, although in Queensland that possibly has more to do with expansion plans at numerous feedlots coming online.
Those plans have been in place for some time.
Most of Australia’s 450 odd accredited beef cattle feedlots are in South East Queensland.
Lot feeders have held their own in the cattle marketplace against fervent, grassed up restockers who are now showing their pockets are much deeper than what most people thought.
Lot feeders have consistently accounted for 44 per cent of Eastern Young Cattle Indicator cattle bought for the past four months, according to MLA.
The eastern states domestic paddock feeder steer indicator averaged 311c/kg lwt during the June quarter, up 56c/kg year-on-year.
“More cattle that might have been headed for the live export market have come back onto the market,”Ms Herbert said.
“That has been a help to feedlot buyers, especially considering we are against restockers who seem to be accessing the finance and are wanting - understandably - to make use of that resource they have in the paddocks.”
ALFA believes numbers on feed will now start to drop, simply on account of the sheer lack of cattle.
However, it was unlikely to hit the 650,000 bottoms that have been experienced during the past decade.
Demand for the end product was holding relatively strong, Ms Herbert said.
The National Livestock Reporting Service’s operations manager Damon Holmes said Australian grain fed beef exports were 268,504 tonnes shipping weight in June, up 7pc year-on-year and more than 5000t above the previous record set in 1006/07.
“Our challenge is access to cattle, the same as that of processors,” Ms Herbert said.
More feedlot operators were entering into alignments with producers to secure supply.
“There is also a fair bit of re-examining of the mix of where cattle are sourced and moving further afield geographically,” she said.
NH Foods’ Whyalla Feedlot at Texas on the Queensland NSW border has shifted most of its programs from 100 to 120 days on feed to 150-plus days.
Livestock buyer Greg Krarup said 100 per cent of product was now going through brands, which call for longer-fed cattle.
“We were sourcing 420 to 520kg feeders but have now moved to 300 to 420kg,” he said.
“We’re looking for the same breeds - Angus and predominantly British breeds - and supply is ok at the moment.
“We’ve always had a large footprint of buying, from Tasmania to Alice Springs, and that has really helped us in these times of tight cattle supply.”
Low feed prices triggers shift to lighter cattle
WESTERN AUSTRALIAN lot feeders have experienced the largest drop in grain prices during the past six months but that is fast flowing through to South Australia and Victoria and is now also being felt in Queensland.
“High global grain availability has resulted in lower feed grain prices,” said ALFA president Tess Herbert.
“And lower fodder prices have been triggered by widespread rain.”
Market forecasts were for that trend to continue into the New Year, which was underpinning the shift to feeding for longer, she said.
Trevor and Sharon Hinck, who run Kerrigan Valley feedlot near Hyden in WA and grow all their own grain, said wheat prices had dropped $45 a tonne from post-harvest highs last year.
Barley had come back $35 to $40.
“Other grains like Canola haven’t changed much and proteins, like lupins, have only come back slightly,” Mr Hinck said.
Supply of the high quality, lighter end pastoral cattle that lot feeders wanted at the moment was extremely tight in WA, he said.
“The reality is it is probably more the 340 to 400kg range going into feedlots right now due to price pressure on smaller animals,” he said.
“We’re waiting keenly on new season calves to come through in late November but just how high the restocker demand will be is yet to be seen.”
