Marketing

Introduction

A beast finished in a feedlot is a premium article and should be marketed as such. After 90 days of grain feeding, it will possess firm white fat rather than creamy fat. The eating quality is generally superior in flavour, juiciness and tenderness.

Marketing options

The marketing options are numerous and include:

  • direct sale to abattoir, retail butcher or supermarket;
  • contract sale to wholesaler;
  • sale by auction.

When there is a shortage of prime stock, the saleyards or on-property sales could return premium prices. Allowance needs to be made for higher selling costs including commission and yard fees, ranging from $10 to $20 per head.

Over-the-hook sales, based on predetermined weight and grade prices, will incur lower selling cost and allow the seller to establish the total sale price before cattle leave the lot.

As different segments of the meat market have specific requirements for weight range and condition, the feedlotter should be aware of price differences between various market categories.

The Livestock Market Reporting System provides up-to-date price reports for a wide range of categories.

Forward selling

The three key factors in a feedlot budget are:

  • the value of the animal at entry;
  • the value of the animal at exit;
  • the cost of feed.

The unknown factor, which is critical to the profitability, is the value of the finished product — the exit value.

Some processors and retailers are prepared to set prices up to several months ahead. Time frames generally relate to feeding period, up to a maximum of 6 months (180 days), but the domestic market has generally specified either 70 or 100 days. Producers enter into a contract to deliver cattle that meet agreed specifications at a nominated time. The biggest problem, especially for newcomers to the market, is getting a contract.

On the domestic market, some major retailers offer contracts to selected clients. This may increase if the predicted move towards brand-linked quality assurance gains momentum.

Many advisers to potential small feedlotters are blunt:

‘If you can’t secure a satisfactory forward price, don’t feed!’

The MLA/SFE Cattle Futures Market at the Sydney Futures Exchange may provide feedlotters with the opportunity to lock in an exit value and establish profitability before they start feeding.

Access more information on marketing your cattle.