The transition from a wet season into a drier period is one of the hardest situations to manage. Several tough decisions need to be made in an environment of uncertainty. Many producers can find themselves ‘paralysed with indecision’. One of the key decisions quickly approaching is when to sell the feeder steers.
Key Points:
Falling prices have counteracted weight gains to leave steer values mostly flat
We are approaching the peak season of feeder steer supply
Time to crunch the numbers on your breakeven point and wether to hold ’em or fold ’em
The peak supply period for feeder steers over 400kg is around October and November. Usually after Spring feed quality peaks and before pastures dry-off going into summer and in-paddock weight gains drop off. With September only just around the corner, a large supply of feeder steers is expected to hit the market very soon.
Figure 1: AuctionsPlus feeder steer (400kg+) supply seasonality 2016 – 2022
Figure 2 depicts the value of a steer from February to November based on a set of assumptions and the prices received for steers at different weight categories on AuctionsPlus. The theoretical steer is assumed to weigh 250kg at weaning in February and be gaining an average 0.8kg per day until it is sold as a feeder steer in November.
Figure 2: Modelled value of a steer February 2023 – November 2023
The price line accounts for changes between weight categories and uses historical sales data from February to August. From September to November is projected based on the same forecasted price changes as was submitted for the MLA feeder steer consensus price forecast.
The model demonstrates that the value of a steer has been treading water for that 9-month period, increasing by only 11% in value. While liveweight has increased by 92%, price per kilogram has decreased by 42%. This value accounts for weight and price without considering the costs of feed, transport or health treatments.
The results of this model are sensitive to changes in average daily weight gain and projected feeder steer prices. Producers should evaluate the value of their steers based on their individual circumstances which would influence weight gain.
Producers should also be aware that a surge of supply in mid to late September will likely push prices lower than 300c/kg lwt. This situation and other possible price movements should be considered.
For any questions, feel free to email me at dthomson@auctionsplus.com.au