Friday, March 29, 2024

Marginal trading reduces risk

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On their Tangimoana finishing farm the McKelvies buy and sell on the same market to evade a cattle trading pitfall.  Tying up millions of dollars in trading cattle can be a risky business. This is particularly so if there is a significant time lapse between selling and restocking. Serious capital can be eroded if cattle prices rise sharply during this period. Traditionally, many sheep and beef farmers buy trading cattle in spring to control the “spring flush”, then finish these in the autumn-early winter. The spring cattle market is always buoyant and the autumn beef schedule price often depressed, so farmers are usually on “a hiding to nothing” when it comes to making a profit from these animals.
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The danger period for farmers operating this trading system is the time between when they sell and when they restock in spring. They may find their money doesn’t go nearly as far as it did previously.

The McKelvie family, of Tangimoana, overcome this risk by buying and selling on the same market.

“We’re operating in the market nearly every week,” Cam McKelvie said, spokesman for the family and son of the National MP for Rangitikei, Ian.

“If we kill a couple of unit loads of cattle during the week, I’ll be in Feilding at the sale on Friday replacing these.

“We buy just as many dear cattle as we buy cheap ones because we are buying every week, but there is always a worthwhile margin in them.”

More forward-conditioned cattle are bought in spring so that killable weights can be achieved in the shortest possible time. Longer-term cattle are bought in autumn. Fifteen-hundred are wintered, supplemented with 8kg of maize silage and 4kg of grass silage a head a day from late June to mid-September. A mixer wagon feeds this out on the drier sandy paddocks to avoid pugging damage to the heavier soils. Average growth rates of up to 1kg/head/day are achieved under this feeding regime.

During August and September two unit loads a week are trucked to the processor. This increases to 130-140 cattle a week from October to January, after which numbers decline as performance suffers because of deteriorating pasture quality.

“We do a lot of topping to try and maintain feed quality. However, once we hit February it is impossible to maintain,” Cam says.

A lot of cattle are bought out of Feilding, though some come privately from long-standing clients whose cattle have performed well on Pukemarama.

“We try and buy quiet cattle that settle quickly on the station because the sooner they start putting on weight, the sooner we get them to killable weights and the more animals we can finish.

“About eight years ago we spent three years monitoring the weight gain of cattle from different sources using EID and found which cattle performed best for us.”

Cam believes that some farmers apply too much of a feed pinch to their cattle early in their lives and this seems to affect their later performance.

The McKelvies process 3800 cattle a year through Silver Fern Farms at an average carcaseweight of 340kg. The only period when cattle are not killed is when the plant is not operating. Most of the cattle (80%) meet the AngusPure specifications.

Read more about the McKelvies: Long-standing legacy

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