MLA’s National Livestock Reporting Service (NLRS) has observed a convergence in the weekly average prices of three steer indicators: restocker yearling steer, feeder steer, and heavy steer. The prices are now within an 8-cent range per kilogram of live weight (lwt), standing at 218¢, 210¢, and 211¢ respectively.
Understanding the Different Types of Steers
To comprehend the significance of these prices, it’s crucial to distinguish between the types of steers:
- A heavy steer weighs between 400–750kg and is typically purchased by a processor.
- A feeder steer is either a yearling steer over 220kg or a grown steer under 600kg, usually bought by a lot.
- A restocker yearling steer ranges from 200–400kg and is under 12 months old. These are predominantly purchased by producers aiming to replenish their herd or breeding stock.
Seasonal Trends and Market Dynamics
Traditionally, restocker animals have commanded a premium over feeder steers, who in turn have been priced higher than heavy steers.
This pattern was evident from early 2020 until mid-2022. Recovery from drought conditions in 2020 led to a surge in demand for restocker animals, peaking the prices at 713¢/kg lwt in December 2021. The premium for restocker steers over heavy steers reached its zenith in January 2022 at 287¢/kg lwt.
However, the landscape is changing. Australia’s cattle herd has swelled to 28.7 million, its highest since 2014. Coupled with an unfavourable seasonal outlook, producers are increasingly offloading stock accumulated over the past three favourable seasons.
Market Outlook
The diminishing restocker premium indicates that the extensive herd rebuilding phase may have concluded for the near term.
The market is expected to revert to the pattern seen in 2019, where heavy steers fetched premiums, followed by feeder steers and then restockers. In a market characterised by abundant cattle supply and high input costs, stock that doesn’t require additional inputs is likely to outperform.
A Closer Look at Restocker Yearling Heifers
MLA reported in April that the premium for ‘restocker steer to heifer’ had reached its highest level since 2019. This gap is expected to widen due to the accelerated pace of herd rebuilding.
Historical data indicates that the steer premium peaks either when cattle numbers have been rebuilt or during intense drought-induced liquidation.
Forecasts suggest that this premium may continue to grow, leading to producers acquiring restocker heifers to replace older cows, thereby capitalising on lower prices to rejuvenate their breeding herd.
By understanding these evolving trends and indicators, stakeholders can better navigate the complexities of the Australian cattle market.
