Returns still there but quick steer trades described as dicey

WHITEFACE SUCCESS: Jim Simpson of
WHITEFACE SUCCESS: Jim Simpson of "Bimbadeen", Gregadoo has sold a consignment of cattle to South Australia recently. Picture: Nikki Reynolds

HIGH buy in prices for restockers show that it's a dicey time to be in the cattle trading game, but there are other options to turn a dollar in the beef industry.

If recent bull sales in the north of the state are to be a guide, confidence in the industry is high.

But for those wanting to purchase steers, put weight on, and sell them again reasonably quickly, the margins are slim.

Mark Lucas of Killimicat Station at Tumut in southern NSW says now is the time to look at the "long game."

It might be a case of reassessing the goals and considering purchasing females. Mr Lucas is an agronomist and also runs the studstock business Reiland Angus.

While parts of southern NSW might appear to be flush with feed at the moment, he cautioned that the region was coming out of a tough seasonal period.

Dry times were taking a toll in the Cooma-Monaro area with large numbers of cattle either sold or on agistment.

Mr Lucas said cost of production calculations were important. A quick turnover could be bench-marked at selling a calf weighing 230 kilograms. To make this happen, the producer would incur around $540 to $580 in fixed costs.

In a drought an additional 25 per cent needs to be added to this initial cost of production.

"The farmer isn't making any money until the calf returns at least $600," he said. But that was a calculation which Mr Lucas said was achievable.

If the current market was to be a guide, he said it was difficult to make money in short-term trades such as adding weight to steers.

He said the herd numbers and huge kills of breeding females had impacted the dynamics of the industry significantly.

"Like all (business) enterprises you have to look at a six-year time frame ... there are people who have made money but at the moment it's a bit skinny," he said.

In terms of investing in seedstock confidence was clearly evident. Mr Lucas said breeders were paying money to invest in bulls to improve the genetics of their herd.

Mr Lucas said old bulls could be traded out for as much as $3500 in the current market. This meant that paying $8000 for a sire certainly was within the budget.

But obviously a lot more than that has been paid for bulls when purchasers consider genetic potential and herd improvements.

Jim Simpson of "Bimbadeen", Gregadoo has bred Hereford cattle for 27 years and agrees with the long-game approach to making money in the beef industry. He said the slaughter figures for females were staggering.

"You can't just go into (cattle) in the short term and expect to make money out of it immediately ... it is at least two years before you look at getting any profit," he said.

Overall Mr Simpson said he was confident about the outlook of the cattle industry. In recent weeks prices had fallen by 5c/kg to 10c/kg at the Wagga cattle market.

However, on Monday prices increased again by up to 10c/kg with limited numbers and the prospect of rain in the region.

Mr Simpson said pockets of southern NSW looked good and there was evidence of pasture and crop growth. "We need to see the dams filling and creeks running though," he cautioned.

"We are looking down the barrel of a good season and we need more rain in August, September and into October," he said.

As a commercial breeder of whiteface cattle Mr Simpson said lucrative markets were definitely available.

"We will send another consignment of Hereford steers to South Australia this week," he said.

The Hereford steers averaged just shy of 400 kilograms. In the past Mr Simpson has sold heifers across Bass Strait to Tasmanian buyers.