The southern weaner sales are always highly anticipated, and the major Western Victorian bout of sales are less than a month away. January seems a long time ago, especially in 2020, but we do know that the weaner sales largely missed the price rally, so we are likely to see a record this year, the question remains, by how much.
The cow/calf producers of the south who sell weaner cattle at the annual December and January weaner sales are the only producer left who have missed out on the high young cattle values of 2020.
Figure 1 shows that while the Eastern Young Cattle Indicator (EYCI) was on the rise early in the year, the sales came about six weeks too early to realise the big gains. Figure 2 shows weaner steer prices in 2020 were slightly higher than in 2019, and the premium to the EYCI was relatively strong at around 14%. At the time there was reason to be happy with weaner values. It was only in hindsight, after significant rain, that they looked cheap.
This year there is no doubt weaners will make record prices, figure 2 shows just how strong the market for weaners around 300kgs is at the moment. Weaner steer prices are around 78% above January’s levels, and the premium to the EYCI is at a record 30% plus.
The other thing we are seeing at the moment, and is likely to continue, is the large spread between cattle weighing 300kgs and those weighing 400+kgs. A premium of more than 100¢ exists for lighter cattle, and this is likely to continue.
The last couple of weeks have seen all cattle prices ease, and weaners haven’t been exempt. Prices remain very strong, but have lost up to 10% over the last fortnight. The difference between light weaners making 450-500¢ in January or 550-600¢, is rain in Queensland. November was dry in the north, but if a La Niña wet season arrives in the coming month, prices could get very hot.
At recent prices light weaners look expensive on both an absolute and relative level, but figure 3 shows why they are still being bought. There is still some money to make on growing light weaners out to feeders if the price remains strong, and heavy steers if plenty of weight can be added.
What does it mean?
There is up to $300 per head hinging on northern rain before the weaner sales for lighter cattle. For heavier weaners it’s not as important, but would still offer good support to prices. Recent prices have been about at the upper limit without significant movement in export beef values.
There is obviously downside if demand weakens as the weaker margins on offers aren’t going to attract buyers without abundant feed, but we are still headed for record pricing for weaner sales regardless.
Key Points
- Last year’s southern weaner sales largely missed the price rise of 2020.
- Record price levels for weaner sales are assured, but plenty is hinging on northern rain.
- Margins on growing out weaners are tight, and only for those with abundant grass.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: MLA, Mecardo
