Southern conditions and confidence to factor in upcoming weaner sales

• The upcoming 2024-25 weaner sales are set to begin soon, likely operating under different conditions compared to previous years.

• A lack of producer confidence, challenging conditions in the south and conversely northern buyers chasing lighter cattle for a 2025 trade are all factors to watch.

• The StoneX Cattle Swap forward prices show the market pricing itself flat into Q1 2025, as participants look to manage price risk by locking in forward prices.

2024-25 annual southern weaner sales

Focus will soon turn to the annual weaner sales beginning in southern Australia beginning in the next month, where the autumn calves of the Victorian, South Australian and southern NSW herds are sold.

This year’s sales are expected to differ from past years, primarily due to the impact of the dry 2024 season. Key facts include:

Lighter weights: Drafts at these sales are anticipated to be lighter than recent years, potentially offering good value for buyers chasing weaner cattle to grow out.

Reduced southern demand: Demand from southern buyers – typically those looking to purchase these weaners for backgrounding or grass fed kill programs – may be lower than past years due to the difficult 2024 season.

Increased costs, confidence and financial challenges: Higher operational costs, higher interest repayments, limited access to capital for highly leveraged businesses and a lack of confidence in the market from 2023, could affect the demand for cattle.

Despite the challenges expected, opportunities are also emerging. I anticipate northern buyers (north of Dubbo into Queensland) will remain active, with strong demand for well-bred lighter cattle. Lighter drafts with good frame lacking weight present good buying opportunities, enabling buyers to secure large runs of cattle for a 2025 trade.

Heifers for feedlot entry or suited to the grassfed trade hold particular potential to astute buyers, some of which will have purchased similar cattle at these sales a year ago.

The challenge for these sales, lies in the lack of feed for many southern properties. If the producer does not have the feed or confidence to compete in the market against the northerners, this dynamic may put downward pressure on prices. As always, quality, well- presented cattle will attract strong prices. A wet lead up to Christmas should set the stage for opening sales in January to start stronger than the end of the 2024 market, much like they did earlier this year.

Swaps update

The StoneX Cattle swap continues to see solid interest across January/February/March 2025, with buyers and sellers of the swap actively seeking opportunities to hedge their risk and limit their exposure to price volatility.

Users of the swap are continuing to reference the security the swap provides them to plan and budget forwards with certainty whilst knowing they have managed their risk exposure on the sale/purchase of cattle.

The market as seen in Table 1 is pricing itself firm across the months forward with little change from the cash market price into the first quarter of 2025, this is within a tight range between $3.60 - $3.65c/kg lwt

Buyers and sellers are seeking cover from adverse weather changes, either wetter or drier conditions which influence the market. This shows the sophistication of the users recognising risk within the market and by trading the StoneX Cattle Swap forwards, they’re actively looking to remove that market and price risk.

Table 1. StoneX Cattle Swap forward prices - dated 12.11.2024

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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