The headline numbers for the southern weaner sales look good, but the ‘drought paradox’, where heavy cattle are more expensive in ¢/kg than light ones remains firmly in place. However, with the Eastern Young Cattle Indicator (EYCI) likely to open lower, vendors can be rightfully happy with prices.
The top prices for cattle at Hamilton and Casterton came in at 344¢/kg lwt, and it was for some of the heaviest cattle. Prices at these levels did come as some surprise. Before Christmas northern lotfeeders were paying a high of 340¢ delivered for export feeder steers. Adding freight will land southern weaners at between 355 and 375¢ in northern feedlots so we might expect direct feeder prices to open higher.
Once cattle moved into lighter weights, values were closer to those expected. Most weaner steers in the 250-350kg range have reportedly been making 310-325¢/kg lwt. On the lighter cattle, live exporters have been providing support where northern buyers were missing.
The good spring in southern parts of Victoria and SA helped put a floor under prices as well. Fewer cattle were on offer, and plenty of lighter steers have gone back into local paddocks.
Figure 1 shows an update on the chart we produced back in December, but back then we were guessing weaner prices and the EYCI. This time it’s just the EYCI which is a guess. Looking at Roma’s store sale on Tuesday it seems like the EYCI might open lower, but it could readjust in coming weeks.
If the EYCI is any lower than 490¢, the weaner premium will be at a new record in 2020. Figure 1 shows that if the EYCI opens close to 465¢, as we expect, weaners will be at a 25% premium, easily beating last year’s record of 20%.
What does it mean?
Perhaps the most encouraging point to take out of the weaner sales was export feeders showing their hand, and giving a taste of what those with feeders to sell over the coming months might expect in terms of price.
Despite the slightly higher than expected prices, weaner cattle are still affordable for those lucky enough to have feed. The prospects of lower feeder or finished cattle prices are small, and as we have seen this week, weight in cattle will continue to pay off. It will take drought breaking rains and a bit of time to reverse the drought paradox.
Key Points
- Heavy cattle made the headline prices at weaner sales.
- It looks like a new record will be set for weaner sale premiums to the EYCI.
- There remain strong margins in buying weaners if feed is available.
Click on graph to expand
Data sources: MLA
