Feedlots send market signals back to producer to prioritise steers

When considering market dynamics and buying behaviour of the producer, the restocker steer to heifer price spreads are a very good indicator of demand and buying attitudes. This is particularly relevant for ascertaining producers’ attitude towards the cattle cycle and where the herd is being positioned to rebuild or liquidate.

As Figure 1 demonstrates below, as the cattle cycle shifts from rebuild to liquidation and so on, so do the spreads between restocker steer and heifer prices – aligning with the cattle cycle, providing a solid indicator to whether the producer’s demand is there for heifers to rebuild herds.

FIGURE 1

The most notable events in this pattern have been the beginning of the rebuild in late 2020 early 2021 where spreads narrowed to their tightest rates since the 2010, and subsequently, shortly after where spreads widened in line with the dry pinch in 2023 and market crash drove a dislocation in prices due to the weak demand for females.

What the data says?

Evidently, as Figure 1 shows above, despite the spreads narrowing between steers and heifers since peaking in 2023, they remain historically wide. Recently finished Q3 2025 data has the spreads at 19% or 71c/kg lwt, down 5% or 4.2c/kg lwt on Q2 2025 numbers.

To surmise, these numbers continue to reflect the fact that the producer mindset is not one of rebuilding intentions. Spreads are narrowing but remain in the top 18% of quarters since 2010, in terms of how wide they are. To compare, Q3 2020 spreads were in the lowest 30% of quarters when they were significantly tighter as producer rebuilding demand took hold.

Feedlot market signals shifting the dial?

What has become noticeable, is that since 2020 when the drought had broken, or was about to break for many regions, the price spread between steers and heifers has never really recovered to its traditional pattern preceding the drought. Spreads have stayed historically wider than levels they ever reached prior to 2020.

To me, this is an indicator of the overall strength of the rebuild which for 6 years has now meant weaker demand for females and secondly, the influence of feedlots in buying heifers. As the feedlot sector over 20-30 years has continually grown and evolved, the market signals from feedlots back to the producer, suggest with fewer interested in heifers, any producer that chooses to background cattle for feedlot entry will prioritize steers.

Meaning the overall market demand for steers is stronger due to more competition – when you examine how the spread has operated since 2020, this wider nature of the spread aligns with growth in cattle on feed numbers in Australia to the tune of 56% or 570,000 head between Q2 2020 and Q2 2025.

What remains interesting about this dynamic, is that at an anecdotal level, some producers are preferencing backgrounding heifers because of the cheaper buy price relative to steers and the fact that the sell rates are much closer or comparable.

Swaps Update

Market engagement on the StoneX Feeder Cattle swap as the price rally begins to ease has increased strongly, this is from both existing users and new, prospective users wishing to hedge price risk on the downside with market performance in the top 20% of prices on record.

Forward bids and offers on the swap show the market in carry, which although unusual in livestock markets, means that the forward bids and offers are higher than the spot prices if cattle were sold today. Strong buying interest has extended well into the middle of 2026 – providing producers, or sellers of the swap contract, actionable bids to work against in order to hedge risk.

FIGURE 2

The Bottom Line

• Restocker steer to heifer price spreads remain wide, indicating that the broader producer mindset is not one of a rebuild intension.
• The overall strength of the season for the past 6 years has meant demand from producers to complete any kind of rebuild, hasn’t been there.
• The StoneX Feeder Cattle Swap market is priced in carry – an unusual trend.

Ripley Atkinson's experience in the red meat industry and current role at StoneX developing price risk management tools for Australia’s sheep and cattle sectors ensures he delivers unique, whole of supply chain insights and analysis across key factors such as prices, supply, production and the drivers of the sheep and cattle cycles.

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