There is plenty of chat within the sector that store cattle are cheap buying. But even buyers in areas where grass growth rates are soaring don’t have the usual conviction to jump in and take advantage of these prices. Instead, many are looking back at events and pricing trends this time last year and through into early this year. Close to $1/kg came out of store cattle values between spring 2019 and February-March this year, and that is potentially keeping bidders’ hands deep in their pockets.
AgriHQ data continues to show that quality, well-conditioned cattle are still attracting an active buying bench, enabling prices to remain at expected levels. The lesser quality and dairy-cross cattle continue to struggle though, as buyers understand these represent a longer-term finishing option.
Another feature of the store cattle market this season is the large number of light two-year cattle on the market. This is representative of many regions farming through drought for the first six months of 2020, which continues to have lingering repercussions on cattle in spring. Many of these cattle would have been lining up at processing plants, or close to it, rather than being recycled through the store pens at sale yards. It’s easy to connect the dots and realise that if these cattle aren’t up to scratch weight-wise, then it is taking out a larger group of finishers that would otherwise be looking to re-enter the store market.
AgriHQ data clearly shows the heat has gone out of overall yearling cattle values relative to schedules through October. Demand, and therefore values, are not as strong as they were in August when a short-lived grass market took hold. Based on historical values, North Island yearling bull prices in the paddock are undercooked by about 30c/kg. In the South Island values are about 15c/kg below normal, suggesting that these currently represent good buying compared to historical levels.
Yearling steer and heifer values are feeling the same pressure.
Generally, yearling cattle have battled against much larger offerings this spring, which appears to have dampened values. If we apply that same method to two-year cattle, steers in the North and South Island are on average 10c/kg and 15c/kg stronger respectively than historical levels whereas two-year bull and heifer values are in line with historical averages. The firmer two-year steer market could reflect a little more confidence in that space, based on the perception that these cattle represent a safer shorter-term option.
Any way you look at it, there have been some notable changes to store cattle market trends for this spring. The general feeling of larger numbers on the market combined with strong memories of significant pricing downside last year have many readjusting their budgets and/or buying and selling policies. The need to replenish baleage stocks also appears to be taking priority over buying in more cattle in regions where feed is flush.
