With the cattle market continuing to run at a record pace, the fundamentals of supply and demand within the market remains grossly imbalanced. Measuring supply is the easy part, from weekly offerings to the national herd. But how do we quantify demand? Through AuctionsPlus, two demand traits have been getting plenty of scrutiny in recent week – clearance rates and user bids, or “clicks”. Through each metric, analysis is undertaken to determine the pre-auction consideration for cattle online, along with the result, or clearance rate of transactions upon conclusion.
Firstly, anecdotally the demand for all types of cattle is “extremely high”, as producers look to make the most of the excellent seasonal conditions, as a national herd rebuild takes shape. If demand is solely imitated by the record level of cattle prices, it is at all-time highs, as producers compete fiercely for a supply of cattle that is unable to match buyers’ requirements.
But how can we measure the level of competition at each sale? On a weekly basis, AuctionsPlus user bids, or clicks, shows the individual attempts by producers to secure cattle. For example, across the three commercial cattle sales held last week, there was 11,329 individual bids. Compared to the same week in 2020, this was up 43%. Comparatively, there was 16,920 head of cattle offered through AuctionsPlus last week, which was down 27% from the corresponding week in 2020, at 22,890 head.
On a cumulative basis, for August 2021, AuctionsPlus commercial cattle sales registered a total of 40,036 clicks – an increase of 54% from August 2020. For the same period, total cattle offered through AuctionsPlus was up 30%.
Secondly, clearance rates - the largest influencing factor of the overall transaction rate on a weekly basis in the current market is the reserve level established by vendors. Last week, for 1,515 head of 200-280kg steers, 100% of the offerings sold – which clearly indicates that buyers blew past the reserve levels, of what in most instances, were motivated sellers (motivated to capture the record prices on offer that is).
In contrast, of the 1,539 head of PTIC heifers offered last week, the clearance rate finished at 68%. Analysis for this category showed that buyers were not able to dig deep enough to enable a sale to be finalised for almost 500 head of cattle within the designated sale time. While still very keen to attract the recent prices, the PTIC vendors could also be described as far more “hard-edged” – in that having set their own “value-based reserve”, underpinned by the flexibility of the excellent season if required to hold onto the unsold heifers into the near future.
Finishing up with the easier of the two fundamentals – supply. Measuring supply on a weekly basis for the cattle market is straightforward. AuctionsPlus listing, saleyard numbers, weekly cattle throughput by processors – all very quantifiable and reported in a very timely manner. Indeed, last week through AuctionsPlus, the supply of commercial cattle for sale was an exacting 16,920 head. Similarly, MLA’s NLRS reported weekly saleyard throughput was 37,980 head.
Since the start of July 2021, AuctionsPlus cattle listings, at 176,995 head, are up 8% on the same period in 2020 (163,579 head) and 85% from 2019 (95,550 head). Given that the 2019 period was heavily influenced by drought, there was a heavy skewing of cattle entering the physical yards, which kept online listings subdued. Utilizing MLA’s NLRS weekly yarding, in 2021, total numbers since the start of July, at 441,844 head, are down 10% from 2020 (490,844 head), and 27% compared to the drought surge of 2019 (606,890 head).