Saturday, March 30, 2024

PULSE: Reliable cattle an underrated insurance policy

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Spring store cattle markets are beginning to get under way in earnest, making it a good time to observe how the lead up to summer may play out.
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The yearling steer market has undergone a bit of a correction this past fortnight, but in theory it is close to settling.

From matching store values to schedules through the past decade, the expected range for yearling beef steers is $3.35-$3.55/kg in the North Island and $2.95-$3.15/kg for the South Island, through October and November.

Only two years deviated significantly below this range, both held back by El Nino forecasts.

Yearling bulls have been more varied in spring, but around $2.95-$3.15/kg in the North Island and $2.55-$2.85/kg for the South Island would fit in with usual levels. This would be a slight increase on what is being paid currently.

If this was any other year, then all the talk of La Nina may have seen another 20c/kg paid on top of what is quoted above in the North Island due to expected rains through eastern regions. 

With plenty of uncertainty about autumn beef schedules and current feed levels quite variable throughout the country, it’s difficult to see anyone wanting to get over-enthusiastic buying up cattle. 

La Nina often keeps rain away from the eastern South Island, and anxiousness around this will only hold back store cattle markets there too.

Dabbling in the store cattle markets is a risky game given what is paid is extremely closely tied to New Zealand’s variable weather systems.

If this year has shown us anything, it’s that quality and reputation are a very solid insurance policy against market swings, especially if the sale yards are the chosen sale method.

Reliability is the big factor for large-scale buyers with the deepest pockets.

It’s been common for two almost identical lines of yearling cattle to sell for a $50 per head plus difference, simply because one vendor’s cattle has a proven track record of performing, whereas the other is more of an unknown.

This ties in with genetics too.

Straight beef bred yearling steers have consistently sold for 40c/kg more through spring than Hereford-Friesian counterparts over the past three years. On a 300kg animal, this is an extra $120/hd. Some of this is related to Angus premiums received at processing time, but the ability for these cattle to withstand tough climates such as drought is key too.

This sort of discount extends quite a lot further for any lines which have any obvious Jersey breeding showing – especially when it comes to bulls. Slower growth rates are the obvious drawback of these cattle, but bull finishers often note issues with aggression on crossbred bulls as well.

Considering only a third of the national dairy herd is classified as Friesian, almost half being Friesian-Jersey, it is likely these types of cattle will become more dominant on the NZ landscape. Or less dairy beef calves will be reared, therefore increasing our reliance on beef bred cattle.

With little evidence of a growing beef herd, it ultimately means a tightening in store cattle supplies going forward.

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