Trading beef cattle can be a difficult process and one that isn’t easy to predict the profitability of, especially for the less experienced, part-time or opportunistic traders.
Full-time traders are in the market almost all of the time, consistently selling and then re-buying on the same market, making margins more consistent. While this approach has its ups and downs, it is quite profitable when done well.
Opportunistic traders on the other hand, almost always enter the market when they’ve got a surplus of feed. Often when one producer gets rain and is having a favourable season, large areas around them have plenty of feed as well.
This disturbs the supply/demand balance and almost always means they’re buying on a competitive market and often means selling when prices are lower.
If these producers don’t have the ability to back fill with lighter cattle on the same soft market, they often crystallise a slim profit margin on the trade. Sometimes even a loss. Repeat this process a few times over your years on the land and you can understand why a lot of producers are apprehensive about trading beef cattle.
Recognising the complexities and challenges of cattle trading, Western Queensland beef producers Andrew and Megan Miller developed Herd XL.
Herd XL is a new iPhone, Android and Web App designed and developed by beef producers to give the industry access to tools that help them make optimal decisions when it comes to the buying and selling of livestock.
There’s a suite of different tools available in the app, but in particular Herd XL’s ‘Trader’ can help tackle the difficulties mentioned earlier.
Herd XL’s Trader tool allows you to determine the likely return on investment from different trading scenarios. For those opportunistic traders, it allows them the ability to quickly and easily compare different trading options and know what sale price they will need to get in the future, in order to return a desired profit.
For example, if someone buys 250kg steers at $4/kg, transports them 400km, and vaccinates and retags them, the landed cost would be about $4.12/kg. After keeping them for 12 months with a daily gain of 0.5kg, paying $5/head/week for agistment, and trucking them back 400km for sale, they would need a sale price of $3.50/kg to make a profit worth their while and at least $3.18/kg to break even. Herd XL makes working through this process simple and straightforward.
Figure 1: Herd XL App Screenshot.
Above is a screenshot from within the app of the 'Trader tool' and below is an example of the PDF report which can be shared from within the app.
All tools, including the ‘Trader’ will benefit anyone involved in buying and selling beef cattle, part-time or experienced traders, whether 20 or 20,000 head. The tool can be used to compare different trade options and look at which will prove the best return per head and per animal unit.
It’s all available in a simple app form, with features including the ability to save and share results as PDFs, as well as being able to use the app without access to mobile coverage.