Thursday, March 28, 2024

R2 steers in demand

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Beef finishers around the country are paying high prices for rising two-year-old steers because there’s not enough on the market to meet demand.
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“People are hunting them down and big money is being paid. There must be some question about the margins when spring slaughter comes round,” AgriHQ analyst Rachel Agnew said.

Agents have reported phenomenal demand for Angus and Angus-Hereford cross steers – on the North Island’s East Coast the money in the paddock is in the $3.10-$3.20/kg range, rising to $3.40/kg in the saleyards.

“The demand peak is about now,” Agnew said.

Heifers are also in strong demand and short supply.

The R2 steers are the sought-after animals in the beef market through winter. Buyers look for a quick and profitable turnaround with processing in the September-through-December period.

The shortage of stock follows on from a declining New Zealand beef herd over the past few years, and for heifers, shipments of live animals to China is a factor. On the demand side, more farmers are switching from sheep to cattle rearing.

Wet weather and sodden pastures around the country may be the one factor to bring more stock on to the market over the next few weeks, Agnew said.

AgriHQ analyst Mel Croad said in a report that unwavering buyer demand was the main reason for the record prices for this time of year.

Her analysis showed that through July, R2 steers typically sold at 52% of the schedule, but the market was now about 56% of schedule, meaning that buyers were paying 20kg “above the odds”.

For rising one-year-olds the premium was higher again, with heifers up to $3.60/kg in the paddock at 63% of the schedule instead of the typical 54%. That’s a premium of 55c/kg. For R1 bulls and steers, the premium over schedule is 30c-35c.

However, the R2 market is the big one at this time of year – R1s usually come on to the market in numbers from early to mid-August onwards.

AgriHQ data shows an expected schedule for a 295-320kg steer at $5.90/kg in August, $6/kg in September, $5.95/kg in October and November, and $5.80/kg in December.

“They’ll be eating a huge amount of food to get to processing,” Agnew said of the cattle.

Store prices usually follow the processing price higher through late August and early September, but Croad said it could be a big ask to see strengthening from already well-above-average prices.

However, the August price ratios have risen to even higher levels at least once in the past, and if there’s a repeat R1 bulls could hit $4/kg in the store market, with a possible 5c-10c lift for R2 cattle.

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