Negotiate, Negotiate, Negotiate… Plenty of Post Auction Action

As all sides of the cattle market navigate some challenging operating conditions, recent post-auction negotiations have been very instructive, with plenty of action continuing after the “fall of the hammer”.
With the inevitable surge in supplies, given the cold and wet conditions experienced throughout 2022 which has delayed the finishing of cattle, buyers have had some additional flexibility in both purchasing options and leverage in recent weeks.

The overall clearance rate of the commercial cattle sales on Friday, November 18^th, was 51% at the immediate close of the sale. This clearance rate rose to 63% by COB on Tuesday, November 22nd, as agents continued to negotiate with bidders in the days following the sale. The corresponding week in 2020 was very similar to 2022, with 20% of cattle sold post-sale.

However, in 2021, just 6% of cattle were sold via post-sale negotiations in the corresponding week. This period in 2021 was the peak of restocking activity, when limited supply of cattle and grass-fuelled demand drove the market to record prices at the end of 2021, through to the start of 2022. Listings through AuctionsPlus commercial cattle sales in that week were below 15,000 head, compared to over 20,000 head in the same week in 2020 and 2022.

Post-sale negotiations have featured heavily during 2022, accounting for an average 18% of successful sales, compared to 11% in 2021 and 12% in 2020 (see Figure 1). In the first half of 2022, this was due to a combination of high expectations of vendors and their ability to hold onto stock for longer, with an increasing unwillingness of buyers to match expectations. Into the later part of the year, the balance in the market has seemingly started to move towards the buyer, with cash-flow, rising costs, access, and expectations for the first half of 2023 all weighing into purchasing considerations.

The negotiations taking place after the most recent Friday cattle sales led to many vendors accepting prices below their initial reserve to secure a sale. The average value from reserve of the post-sale negotiations was -$36/head, compared to $142/head during the sale. This caused the prices for each category to average lower - medium steers weighing 280-330kg averaged $1,792/head immediately after the sale, which eased to $1,756/head by COB Tuesday, as the clearance rate rose from 42% to 69%. Likewise, PTIC heifers averaged $2,572/head immediately after the sale and fell to $2,405/head through post-sale negotiations, with clearance rate rising from 32% to 55%.