The benchmark price for northern Australian crossbred feeder steers, cattle destined for grain finishing in feedlots, rose to a record 579A¢/kg (406¢/kg) liveweight on 5 November, because improved pasture conditions prompted producers to retain cattle and tightened feeder supplies.
The latest price surpasses the previous high of 578A¢/kg set in December 2021. The Argus northern feeder steer assessment has risen by 66A¢/kg over the past four weeks from 513A¢/kg on 8 October. The rally has been driven by season-establishing rainfall across Queensland and New South Wales (NSW), which has transformed pasture conditions after a prolonged dry period and reduced producer selling.
The market is displaying many of the characteristics seen during the 2021 rally, when widespread rainfall supported pasture growth and encouraged producers to delay sales. But supply constraints appear more pronounced this year, because strong restocker demand is also competing for available cattle and pushing feeder availability to exceptionally low levels.
Many feedlots remain short of numbers. Some have stepped back from the market, while others are employing a range of procurement strategies to secure supply, including sourcing cattle through saleyards, buying stock from southern Australia, widening weight specifications and inducting suitable backgrounded cattle.
The strength in crossbred feeder steers is flowing through Angus markets. The Argus northern Angus feeder steer assessment rose by 6A¢/kg this week to 598A¢/kg, while the Argus southern Angus feeder steer assessment increased by 4A¢/kg to 557A¢/kg. Queensland and northern NSW feedlots continue to source cattle from southern regions to fill pens, supporting southern values despite freight costs of 20-30A¢/kg.
Higher feeder prices are increasing pressure on feedlot margins. February 100-day grainfed steer forward offers have been reported at 900-920A¢/kg carcass weight, while March 120-day grainfed Angus steer offers are reported at 930-940A¢/kg carcass weight. Forward contract values have not risen sufficiently to offset sharply higher feeder cattle prices and elevated grain, freight and fuel costs, market participants said. Several feedlot operators continue to report negative feeding margins, with some reducing occupancy rates rather than placing cattle at a loss.
Further support could emerge in coming weeks, with forecasts indicating another 5-30mm of rainfall across inland Queensland and NSW. But deteriorating feedlot profitability may limit the pace of further increases unless grainfed cattle forward contract prices rise enough to offset record feeder cattle values and high input costs.
The supply outlook suggests feeder cattle prices are likely to remain historically elevated through summer. Continued rainfall is expected to encourage producers to retain both crossbred and Angus cattle on pasture, limiting turn-off and supporting prices. Strong northern demand is also expected to underpin southern Angus values as feedlots continue sourcing cattle across state borders.
