A straw poll of southern beef plant operators has this week unearthed growing concerns surrounding future cattle supplies.
Several operators contacted by Stock & Land openly conceded they have good coverage for their May to early July deliveries, and that local feedlots were at full capacity. However, most also admitted they were at loss as to where their late winter, early spring supplies would be sourced, given there are very few pockets of the country have feed to finish cattle.
Another drawback facing the feedlot sector they say is the escalating price of grain and hay which has risen sharply over the past month.
Most concede that opportunity feeders will need special encouragement to continue their current production because the financials don’t stack for the extra time and extra costs needed to finish cattle during the colder months of late winter.
One operator likened the current supply conundrum to a“see-saw”. “Any advantage we thought processors might have at the front end of winter from cheap cattle and cheap grain will surely be given back later in the season as feeders become more expensive and the cost of feed continues to rise,” he said.
“We can’t all process grain-fed 100 percent of time. The market will require grass-fed, but we don’t know where these will be found because of the late start to the autumn.”
Another limiting factor they say will be sourcing of suitable cattle in the north. Normally during the winter a host of southern processors can be found up north buying cattle at auction and privately and trucking them home for processing.
But with the season also dire across NSW these opportunities are expected to dwindle, especially at auction, given the increased numbers being sold direct under relationship agreements.
Another processor buyer he said his company had only recently engaged in talks surrounding the pending supply difficulties and they have sighted the spring feeder supply as a problem.
“We don’t really have much idea where our spring feeders will be found,” he said. Traditional winter back grounder areas he said are presently unloading breeder cattle, and they suspect any potential feeder types are well gone.
Another highlighted the sharp increase the selling of cows and the decline in the price of US beef trim. He suggests the latter still has a way to run to reach parity to global due to global protein prices and the consequences of this, aggravated by the widespread dry, could have an adverse impact on breeding capacity for some years.
However almost all agree, when rain does fall the current purge in selling, especially of cows, will cease immediately effecting the profitability of plants and heightening the risk of closures.
