An extra half a million grass-finished cattle have started hitting the market – the delayed impact of wafer-thin profit margins which pushed many feedlots into hibernation late last year.
Graziers, pondering their next move, face a crunch in a different scenario to the strongly feedlot-driven market of recent years.
Overall, feedlot capacity is hovering at about half, but the shrinkage or mothballing of smaller feedlots has been offset by the activity of bigger players, with some northern lots again close to full.
The NSW feeder steer indicator price has been steady in recent weeks at about 160 cents a kilogram (live) – 17c/kg less than the same time last year.
Many producers still intend to find a feedlot home for their stock, but plenty also plan further grass finishing, and with a decent break yet to appear are flooding advisors with inquiries about protein supplements to capitalise on standing dry feed accumulated over summer.
Meat and Livestock Australia (MLA) chief market analyst, Peter Weeks, expects year-on-year increases in slaughter numbers in the second half of this year, thanks to a combination of cattle that would otherwise have been sold grain-finished last year, and drying conditions.
He said the influx of grass-fed cattle would keep prices under pressure in a market already weighed down by the strong Australian dollar and the return of US beef to Korea – and tipped that rates would remain below year-ago levels.
NSW Department of Primary Industries livestock officer for the Central West, Brett Littler, of Mudgee, said producers were weighing up their options and he had fielded "huge inquiry" about how to make use of standing dry feed through protein supplements.
"Most people are trying to get extra weight into their animals, with the hope of getting a bit of crop to finish them off," he said.
"A lot of people haven't built up their cow numbers again, so we're still seeing a lot of herds at 70 to 80 per cent of normal cow numbers."
Mr Littler said most feedlots had lifted entry weights by 20 to 70 kilograms and were cutting back feeding regimes.
At least one northern feedlot had dropped its time-on-feed by as long as 100 days on some longer-fed stock, which were now required at entry weights 40 to 50kg heavier than traditional specifications.
Australian Lotfeeders Association president, Malcolm Foster, Rangers Valley feedlot, Glen Innes, said trading conditions remained generally unfavourable for feedlots, a situation he expected to be reflected in the June quarter ALFA/MLA survey.
"I'm expecting that numbers might be up slightly but not significantly," he said.
"Now if you get significant numbers of cattle turned off, then that will depress the price of cattle, and then suddenly the feedlot option becomes more viable."
Mr Foster said the balancing point for cattle prices before feedlots would become more active depending on the length of the feeding program would be between 20 and 50 cents a kilogram lower than today's price.
Agent Ben Lehman, Lehman and Frame, Inverell, said high transport costs kept most of the cattle bought at this year's northern weaner sales in the Northern Tablelands – a changed demographic to normal years.
"I've got a couple of clients who have sold 400 to 450kg cattle and then they've gone back in and bought 260kg cattle to sell to the feedlots in summer," he said.
"Those 400 to 450kg cattle had a bit of condition on them and the season's deteriorating, so they're better off feeding two 260kg steers than a 450kg steer."
*Extract from an article in this week's The Land, Thursday, May 29.
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