Farmers are banking on an ever-increasing market to get a return after paying “never seen before” prices for young cattle at sales in Victoria this week.
Each year the state hosts a series of “weaner” cattle sales, which kicks off in the first week of January. Young, recently-weaned cattle are sold to buyers who will continue to feed them and grow them until they reach full weight.
However, increased competition has led many to suggest this year’s sales are the best, or most expensive, ever — prompting fears that beef farmers might struggle to make a profit at the other end.
The extra demand has, in part, been attributed to buyers travelling to Victoria from Queensland and New South Wales, where farmers are seeking cattle to restock their paddocks after years of drought.
Northerners boost sales
The first sale of the week was held on Tuesday at Mortlake, in south-west Victoria, where agents’ association president Matt Baxter said there was a “massive” crowd of buyers, many of whom had travelled from as far as Tamworth and Dubbo.
“We didn’t have (that competition) last year,” Mr Baxter said. “There was no real interest from the north.”
The sentiment was reflected at many sales across the state this week, including at Pakenham on Thursday, where Alex Scott & Staff livestock manager David Setches said “it was certainly one of the biggest crowds I’ve seen there for a long time”.
The extra interest from northern buyers is largely driven by rain.
“For the last six months a lot of the cattle have been going back into NSW with rain up there,” Mr Setches said.
“A lot of the calves that we’d normally retain for this weaner sale were sold before winter when NSW was really in full swing buying cattle to go back up there after that drought-breaking rain.”
Mr Setches said many producers opted to take the money last year and part with their cattle early, thinking the prices were good at the time.
Sellers ‘in awe’ as prices climb
Market reporter Jenny Kelly said prices had increased significantly since last year, and continued to increase at Hamilton in western Victoria throughout the week.
“We started at an average of 494c/kg for the opening sale of Angus steers on Monday, but by Wednesday we were seeing averages of 525c/kg,” she said. “Over the whole week the calves are averaging 500c/kg, which is just amazing.”
Prices at Hamilton topped $2,143 for heavy Angus steers on the first day, while at Pakenham they sold for up to $2,010.
The top price for lighter steers at Casterton was 644c/kg, paid for light Hereford steers weighing 240kg ($1,545).
Paying over 600c/kg for cattle is rare. Ms Kelly said despite crowds being subdued at the sales, excitement among sellers was high.
Prices ’30 to 40 per cent higher’
Mr Baxter estimated prices at Mortlake on Tuesday were 30 to 40 per cent up on 2020 prices, with consignments of larger numbers of cattle in particular demand.
“Buyers were jumping over the rail for the bigger runs,” he said.
Ms Kelly said despite this, some buyers were still leaving the sales empty handed, which suggested the higher prices could continue for some time.
“In the short term it looks to be sustainable, in that even though we’ve had big crowds at these sales there’s a lot of people still going home empty handed,” she said.
“A lot of agents are telling me they’ve still got a big list of clients who want cattle.”
‘Frantic feeling’ for buyers
The agents now have to hope that those buyers who did secure cattle at higher prices are able to make a profit when they sell a finished product.
“We just hope (the market improvement) continues and we can get some sort of margin out of these cattle,” Mr Setches said.
“Hopefully the finished product gets stronger because of the lack of cattle that are out there in the paddock.
“There nearly seems to be a frantic feeling out there … people are concerned that if they don’t come in even at these prices they won’t get numbers.”
Ms Kelly said there was concern that the market was overheated.
“When you look at what’s happening at the other end of the market in terms of returns for prime bullocks and feeder steers … this money shouldn’t be on the table,” she said.