Record grain-fed cattle prices matched by feeders

Record grain-fed cattle prices matched by feeders

Beef
Figure 1: Northern grain-fed inputs vs sale price. Grain prices for northern feedlots have been relatively steady, with sorghum tracking around $350/t and wheat $400/t, but feeder cattle prices have been on the rise.

Figure 1: Northern grain-fed inputs vs sale price. Grain prices for northern feedlots have been relatively steady, with sorghum tracking around $350/t and wheat $400/t, but feeder cattle prices have been on the rise.

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The upward trajectory this year has taken grain-fed cattle prices from 547 in March to hit the new high of 598/kg cwt at the end of August.

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STRONG export demand, a weaker Australian dollar and tight supplies of grass finished cattle has seen the Queensland Over the Hooks 100 day Grain-fed Steer Indicator hit a new record in recent weeks.

The upward trajectory this year has taken grain-fed cattle prices from 547 in March to hit the new high of 598/kg cwt at the end of August.

The previous record grain-fed cattle price of 596/kg cwt was set back in late winter and spring 2016 when the number of cattle on feed was 788,873 head.

The fact that the new record price has been set when there are 45 per cent more cattle on feed is a testament to the increasing demand for grain-fed cattle.

Rising grain-fed cattle prices have been matched by rising input costs in the north. The Shortfed Feeder Cattle Indicator has rallied 12pc, or 37 since the end of April to sit at a two year high of 333/kg lwt.

Southern lotfeeders input costs are higher, with medium fed feeders at a 10 premium to shortfed steers, sitting at 343. Cheaper feed has offset some of the rise in feeder cattle prices. In recent weeks, this has seen total input prices fall.

Figure 2: Southern grain-fed input vs sale price. The price of wheat in the Riverina has varied from $350-410/t this year and last week was sitting towards the bottom of this range at $354/t.

Figure 2: Southern grain-fed input vs sale price. The price of wheat in the Riverina has varied from $350-410/t this year and last week was sitting towards the bottom of this range at $354/t.

What does this mean?

Moves in input and sell prices have seen lotfeeder margins remain relatively steady for the last four months in both northern and southern zones. There is little room for prices to rise without a move in grain-fed cattle values, but margin pressure will start to come on lotfeeders with as little as a 10/kg lwt rise in feeder prices.

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