Last week we looked at the trading budgets for young cattle, which showed definite opportunities if producers have feed in front of them. Higher herd numbers would indicate plenty of females have been retained on farm, but heifers don’t start to contribute to cash flow overnight. So what are the trading conditions currently like for those looking to capitalise on a wet winter and either trade out older females or expand the herd?
To the outgoing first. The national
processor cow price ended last week at 501¢/kg, which was nearly 30% above
year-ago levels and 4% stronger than the five-year average. Having reached
514¢/kg a fortnight ago, the last time it was dearer than that was May 2023.
But more importantly, where is it headed?
Using both the five- and 10-year-average,
we can see that between now and the end of the year, the peak for cull cow
prices is mid-November. The trend for that period is fully firm to slightly
stronger, the 10-year average showing a rise of 8% or 38¢/kg, and the five-year
figures climbing more than 10% or 43¢/kg.
Looking at state-specific returns as they
stand at the moment, the latest indicator had roughly equal contributions from
both NSW and Queensland, with NSW trading at 18¢/kg premium to the national
average, and more than 40¢/kg dearer than its northern neighbour. The Victorian
price was stronger again, at 300¢/kg (live weight), but with much lower
throughput. Using the NSW price, this would put a 480kg cow at $1382/head now,
and up to $1516 at the traditional price peak at the end of spring.
Obviously, the cost to buy in replacement
females is harder to pin down due to the variation and reporting gaps. However,
the price discovery tool on AuctionsPlus does offer some good insights into
prices being paid for certain categories at the moment. Firstly, looking at
last week’s national offering on the online platform, pregnancy tested in calf
cows were the largest cohort of breeding stock numbers offered, and cleared
43%, averaging $1634 a head, or 309¢/kg. However, if you look at PTIC cows sold
in the past month within a 500km radius of Albury, NSW, the average price is
$2000. The same search with Dubbo at the centre, prices dip to $1600, and
similarly they are at $1680 for Blackall’s region.
What does it mean?
There should be continued strong support for cull cow prices through the spring, keeping them on an upward trajectory. This is primarily down to the lower female slaughter in the US and their demand for our lean beef product – and the current strong prices they are prepared to pay for it. The revised herd numbers and strong slaughter mean supply is also strong, but if the spring brings good seasonal conditions it shouldn’t skyrocket.
We can see from Figure 2 that what we know about the female slaughter rate so far this year is it is right on average, nowhere near the last turnoff year of 2019, and it historically gets lower in the third quarter compared to the first two. Current figures have it costing about $300 to trade out of dry cows and into PTIC. What we haven’t looked at, and is harder to predict, is where breeding stock prices will head in the spring. They will no doubt get dearer accordingly, but could high supply keep a lid on the upside? As usual, it will likely all come down to rain.
Key Points
- Processor cow indicator now trading above average, and 30% higher than year-ago levels.
- Cull cow price trends higher from now until the end of spring, historically rising 8 to 10%.
- Current figures show you can trade out of dry cattle and into PTIC at a $300 cost.
Click on figure to expand
Click on figure to expand
Data sources: MLA, Mecardo
