Feeder sales ease nationally
04 August 2022
Key points:
- The percentage of sales going to feeders has decreased in the EYCI as well as nationally.
- The increasing cost of inputs, forward contracts and the additional return for adding the extra weight on to an animal are all contributing to this.
A good place to start when looking at the percentage of sales going to feeders, processors and restockers respectively is the Eastern Young Cattle Indicator (EYCI).
With the EYCI price easing over the past month, there has also been a shift in the split of sales occurring each week.
The following graphs show the split of sales between feeders, restockers and processors in the EYCI two weeks ago (Figure 1) versus eight weeks ago (Figure 2).
Figure 1: EYCI sales two weeks ago.
Figure 2: EYCI sales eight weeks ago.
As shown in the graphs above, feeder sales have decreased steadily. Eight weeks ago, feeders contributed 50% of sales included within the EYCI. Two weeks ago, this percentage decreased to just 36%.
Meanwhile, restocker sales have been on the rise since the beginning of the year.
National feeder sales
The following graph shows feeder sales are easing nationally across all saleyards. Although there has been an increase in numbers since 2018, there are signs of an easing in demand over the last two years.
Figure 3: National feeder sales.
Factors affecting sales
The recent easing in feeder sales could be due to several factors: the increasing price of inputs, the use of forward contracts and the additional return for adding the extra weight on to an animal.
Increasing price of inputs
The price of grain and oilseed have been increasing rapidly over the last few years. This makes the input costs in the feedlot sector more expensive per kilogram put on and lowering margins.
The export grain market is also extremely lucrative at the moment, making it relatively difficult to keep supply domestic. This leaves poorer quality grain left over, which makes processing and rationing more difficult.
Forward contracts
Filling forward contracts and buying out of the paddock has been common practice for quite some time. Most feedlots prefer to buy out of the paddock and use the saleyards to fill any gaps they may have. This reduces the feeder presence in the saleyard, as feeders are just bought as needed.
The easing in prices has also pushed some sellers to hold off where they can. This may change if demand at the saleyard increases.
Returns for higher weights
Lastly, with the easing of the EYCI over the last few months, feeders are considering the benefit of putting more weight on animals and selling them in later sales. This is also supported by the current processor backlog, with many processors being booked out for weeks.
Future feeder sales
The feedlot sector is still strong, with expansions planned and pens filling up. It will be interesting to see how movements in saleyard and input prices impact future demand or if filling forward contracts is the way of the future.
