The sweet spot for growing out weaners this winter

Shan Goodwin
By Shan Goodwin
February 24 2022 - 1:30am
RISKS AND REWARDS: Livestock consultant Jeff House says the decision on whether or not to grow out weaners this winter will require considering many factors.

WITH plenty of feed in paddocks and a good three-month rainfall outlook hitting up against a very strong current weaner market, the age-old quandary of whether or not to grow out cattle over winter is this year one of the toughest ever for southern beef producers.

The risks and rewards were weighed up when consultant Jeff Houses, Forbes, ran through some fascinating comparisons of price-per-kilogram trends, and historical monthly market peaks, at a webinar hosted by the South East Local Land Services this week.

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While no analysis can give a definitive answer on whether to take the money and run now, Mr House's dissection of the price story via saleyard indicator data for the past 20 years presented some very interesting considerations.

The trick is to find the sweet spot where the costs of putting on the extra weight comes in the most below the additional dollars gained.

Underpinning that, however, is the need to ensure the targeted weight can be achieved.

On current dollar values drawn from Meat & Livestock Australia indicators, compared to a restocker steer, a NSW feeder steer is worth an extra $345, a medium steer $743 and a heavy steer $1015, Mr House's presentation showed.

What is more important is to factor in the decreasing cents-per-kilogram obtained as cattle get heavier, with restockers currently making 650 cents a kilogram compared to heavy steers at 480c/kg, Mr House said.

As the price-per-kilogram goes down with increasing live weight, the value of those extra kilograms is diminished. The data shows cents-per-kilogram for a medium steer is highest for the extra kilograms gained, at current prices.

So targeting a medium steer weight for turn-off at the optimal market peak is the aim.

The typical pattern is that towards late winter, the numbers of animals coming on the market drops and prices are the highest.

"The market comes back towards the end of year but remains above start-of-year prices," Mr House said.

"However, the last two years have been different - we've been on a steady increase and it's really an unknown as to what will occur this year. There is a chance either way that prices might continue to go up, but more likely they will come back.

"This is the sort of information we need to be across when making decisions about holding cattle, although this all assumes price differentials stay the same relative to today."

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Achievable

The first, and most critical step, is determining you can achieve the targeted weight gains in the time.

That involves a good look at where feed is currently, stocking numbers and how well set up pastures are to respond to rain in winter.

"It's green feed that drives performance. Can you realistically put the kilos on before the green feed is no longer available?" Mr House said.

"You don't want to come out of winter with animals that have gone backwards or are only 50kg heavier than what they are now.

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"The ability to get weight onto them early, rather than waiting for the spring flush when it might be hard to capitalise on price advantages, is key."

Bureau of Meteorology forecasts show the chance of exceeding median rainfall from March to June is high in many southern areas so from a moisture point of view, it looks quite good for achieving these sort of weight gains.

Setting the scene

There are other parts to the puzzle to be aware of too.

"In MLA's projections for the national herd to grow by 1.1m head this year, the big heads up for producers in the south is that the majority of that is expected to come from NSW and Victoria," he said.

"There is a real thought that with a couple of good seasons under our belt the southern states are well into herd rebuilding and animals are starting to move through the system.

"Given the bulk of cattle are actually in northern herds, that 1.1m head growth is quite significant and will have a greater impact on markets in the south.

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"Prices are forecast to fall by 11pc by the end of June but that is from a very high starting point."

Analysts are also pointing to the strong fundamentals in the export job which will underpin ongoing cattle market strength.

At the big picture level, Mr House said challenges to be mindful of include the labour shortage across the entire industry, which in particular was limiting kills in plants and could put questions around the ability of that sector to cope with ramped up slaughter numbers.

A rising Australian dollar would also impact Australian beef's competitiveness globally and freight and shipping challenges on the export side were still very much in play.

"Overall, however, the outlook is positive if you're looking at growing animals out this winter," Mr House said.

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Shan Goodwin

Shan Goodwin

National Agriculture Writer - Beef

Shan Goodwin steers ACM’s national coverage of the beef industry. Shan has worked as a journalist for 30 years, the majority of that with agricultural publications. She spent many years as The Land’s North Coast reporter and has visited beef properties and stations throughout the country and overseas. She treats all breeds equally.

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