The Autumn stud sale season has come to a close, with a total of 7,143 bulls sold on AuctionsPlus across that period. From an offering of 8,554, this represented an 83.5% clearance rate, for an average price of $11,108/head. Demand for bulls has trended lower this year, as buyers contend with rising interest rates, falling commercial cattle prices and the expectation of drier seasonal conditions.
Key Points:
Bull prices and clearance rates have trended lower in Autumn 2023.
The steer-to-bull price ratio has averaged 9.1 in the first five months of 2023.
A larger cattle herd is supporting higher bull prices relative to commercial cattle prices.
On the flipside, a larger breeding herd means more bulls are required for joining. This has provided some support to the bull market through greater competition, while buyers remain hesitant to bid big. As a result, bull prices have held up better than commercial cattle prices.
There is a strong correlation of 0.75 between monthly bull prices and monthly averages of the EYCI from January 2016 to May 2023 (Figure 1). This is predominantly due to the input/output relationship between bulls and steers, where bulls are a direct input to a beef production system selling steers.
As prices received for steers decreases, income also decreases which means less budget is available for allocation to a new herd sire. This allows for the calculation of a steer-to-bull price ratio which is expected to remain relatively consistent over time and through varying seasonal conditions. However, this ratio fluctuates with the size and movement of the national breeding herd.
The steer-to-bull price ratio has averaged 9.1 steers weighing 280-330kg to one bull in the first five months of 2023. This is well above the seven-year average ratio of 6.3. This is due to a larger herd of breeding females which require more bulls for joining - supporting demand and prices for bulls in 2023.
This relationship was also seen in 2017 when bull prices were relatively higher than steer prices, leading to a high ratio of 7.2 steers to one bull. The opposite scenario occurred in 2020, when young cattle prices took off while bull prices increased to a lesser extent due to a historically small cattle herd at the time. The steer-to-bull price ratio dropped to a low of 5.5 in 2020.
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