Analyst Intel

11 September 2020

ACROSS THE RAILS | Rearers absent from the rails

By Suz Bremner

The feeder calf market has not been smooth sailing this year. In fact, it has been the hardest market PGG Wrightson Waikato’s feeder calf guru Neil Lyons has seen, and he has seen a few in his nearly 60 years in the industry.

The main culprit has been a lack of rearers willing to buy, which has meant that supply has exceeded demand, Lyons reported.

“We are struggling to find anyone to buy the calves this year as rearers have not been making a margin,” he said.

“When they buy a calf for $280-300 and add rearing costs on top but then can only get $500-550 out the other end, it just doesn’t stack up. There is nothing left to make a profit on and that has meant rearers are either taking on fewer calves or are changing their farming policy.

“At some sales there has only been one buyer interested in some classes and that doesn’t exactly make for a competitive environment”.

Limited feed in strong buying regions has also had an impact and low interest in calf contracts does not provide any certainty for rearers either.

The lack of demand has resulted in the lesser condition and smaller calves heading directly to the processors, which has meant that volume at the yards has been down and quality better. 

“What we are seeing in the last few weeks is that quality has improved and so are able to attract higher prices. Good calves are selling well relative to the current market, but poor calves aren’t,” he said.

Calves sold at Frankton are subjected to a vet check onsite prior to sale, giving buyers assurance they are fit for transport.

The only silver lining from this year’s spring feeder calf market is that if the correction in prices this year does flow on, then perhaps more rearers will be able to see a decent margin and step back up to the rails to buy.