Earlier this year we were writing about the last of the Cow/Calf producers to receive the record prices. It was sellers of autumn drop weaners who in December and January achieved record prices, which at the time we thought would be the peak. Fast forward 9 months and this year’s autumn weaners are going to receive a pretty extraordinary pay rise.
Back at the start of the year weaner cattle prices moved above 500ȼ and it was a boon for southern cow calf producers. It was only early 2019 when weaner steer prices were a little over 300ȼ/kg liveweight, so the price increase was 65% in just one year.
For a 280 kilogram steer, the price movement was from around $900/head to nearly $1500. The driver of the 2019/20 price rise was the breaking of the drought, and the shift from herd liquidation to herd rebuilding.
When it looked like 2021 weaner sales might be a record which would stand for some time, global beef markets gave the cattle price another kick. The seasons have remained supportive of prices, but it has been rising international beef prices, plus another wet spring, which has led to this year’s rise in price.
The current prices of weaner steers under 300kgs are extraordinary. At store sales in Western Victoria last week Angus Weaners around 270kgs liveweight made 748¢/kg lwt. As cattle moved towards 300kgs prices were a little lower, but still above 700¢. Lighter cattle under 250kgs have made up to 800¢/kg lwt.
Figure 1 shows how the current weaner prices compare with historical values. We’ve put the weaner steer price in at 750¢, which is a 41% increase on January values, almost double the price of 2020.
Weaner steers in Victoria are also at an extraordinary premium to the Eastern Young Cattle Indicator (EYCI). The EYCI is at record levels, but weaner steers are 35% higher. The previous high in the premium was 19.5% in 2019.
The record weaner prices are being driven by record feeder prices. Heavier steers, suitable for export feeders, are making 550-600¢/kg lwt in store sales. Figure 2 shows a healthy margin for those selling feeders and buying weaners before production costs, and given the tight supply of all cattle, and good feed supplies, backgrounders are unlikely to baulk at a $500 margin.
What does it mean?
Expensive is a relative term. Weaner steers in the south aren’t expensive relative to the price of heavier cattle of similar breeding. They are, however, expensive relative to the EYCI. The EYCI is a broad indicator from prime markets, and it is likely lower due to the inclusion of small lots, heifers, and heavier cattle.
The risk in weaner prices is a late or weak wet season in the north, or falling international beef prices. Historically if the wet hasn’t arrived by the first week in January cattle prices will weaken in the New Year. However, if it does arrive, it drives demand. The international beef price rise can’t go on forever, but even if it falls, autumn weaners are likely to set new price records come the selling season.
Key Points
- Weaner prices in the south are at extreme highs, both in absolute terms and relative to the EYCI.
- With feeder cattle prices very strong there is still money in selling feeders and buying weaners.
- Even if prices ease, they are so far above last year we are likely to see new records for autumn drop weaners in the summer.
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Data sources: MLA, Auctionsplus
