Since the start of 2020, the rebuild in the Australian cattle herd has underpinned soaring cattle prices. With breeding cattle in hot demand, the price movements and premiums across the “proven breeding” lines has been interesting to watch.
In a previous MarketPulse article, we looked at the difference between PTIC cows, PTIC heifers and heavy heifers (400kg+). Finding that the ability to “fast-track” extra calves on the ground with PTIC females within the rising cattle market cycle led to an average annual price-premium of $495/head over 2020-21.
Replicated analysis of average prices for PTIC heifers and heavy heifers (330-400kg) confirms the value of a verified pregnancy. This price-premium averaged $850/head so far in 2022 – 43% higher than the 2021 average of $594/head. It’s clear that when favourable seasonal conditions lead to abundant pasture growth, producers are highly motivated to restock as quickly as possible, with the category of stock that will deliver calves on the grounds as soon as possible preferable.
A similar trend has been found by reviewing the premium achieved by NSM cows and calves over PTIC cows. So far in 2022, an average premium of $665 has been registered for NSM cows with calves-at-foot – reflecting the value of time, having a calf on the ground and potential earlier income into the future. This compares to the slower process for purchasing a PTIC cow, which would take 3-6 months to calve-down and then a further 9-12 months to grow the calf out to marketable weight. The scenario also involves a premium for the security of having a calf on the ground and avoiding the risk of losses at calving.
Reviewing the average prices for NSM cows and calves compared to NSM cows suggests that a calf on the ground was worth an average $1,427/head in 2022 YTD. Significantly higher than the five-year average of $864/head.
Interestingly, this analysis showed that the limited numbers of SM heifers and cows offered through AuctionsPlus weekly commercial cattle sales achieved no premium over unjoined heavy heifers and NSM cows. The premium achieved by PTIC heifers and cows also includes the time involved in joining and waiting until pregnancy testing, along with the confirmation of pregnancy and avoiding empties. However, purchasing unjoined females does give producers control over the genetics of the calves, as well as making the most of the investment in their bulls. It just has a longer time to pay off and with this, increased risk of the market declining.
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