Chasing cows
The Snapshot
- PTIC Heifer pricing has seen a 298% increase in value since mid-2019. PTIC Cow values have lifted 166% over the same time frame.
- The March average price of $2,291 per head for PTIC Cows places the current premium spread to Cows at 21%, suggesting PTIC Cow prices are at relatively fair value compared to Cow prices.
- The recent surge in PTIC Heifer prices have widened the premium spread they hold to Cows to 74%.
- The spread premium PTIC Heifers hold over PTIC Cows has increased to 44%, just shy of the historic peaks seen of around 50%.
- The recent spread behaviour suggests PTIC Cows are better value than PTIC Heifers based on current relative pricing between the two cattle types.
The Detail
Since the start of 2020 Pregnancy Tested In Calf (PTIC) Cow and PTIC Heifer values have began to outperform cow prices as the favourable seasonal conditions encouraged beef producers across the nation to begin a herd rebuild phase. In recent weeks PTIC Heifer values (for cattle 350-550kg lwt) have lifted beyond $3000 per head, based on average monthly store sale prices from the Dubbo, Carcoar (CTLX) and Bairnsdale sale yards.
Compared to PTIC Heifer pricing in mid-2019 this is a 298% increase in value. PTIC Cows, weighing between 400-550kg, have lifted by 166% over the same time frame, meanwhile Cows (400-520kg) are up by 141%. Steers, weighing over 540kg, have seen some solid price gains too but haven’t managed to keep up with Cow prices posting just a 114% lift in values since mid-2019.
Analysis of the percentage spread premium/discount of PTIC Cows 400-550kg to Cows 400-520kg shows that over the last few years PTIC Cows have averaged a premium of 24%, and a normal range in spread fluctuation between a 1% premium to a 46% premium. The March average price of $2,291 per head for PTIC Cows places the current premium spread to Cows at 21%, suggesting PTIC Cow prices are at relatively fair value compared to Cow prices.
The recent surge in PTIC Heifer (350-550 kg) prices to $3,300 per head have widened the premium spread they hold to Cows (400-420kg) to 74%. Historically, PTIC Heifers have maintained an average premium spread to Cows of 34%, with a normal spread range between a 6% premium to a 63% premium, so PTIC Heifers at these price levels are becoming a little overvalued compared to Cow prices. Although the spread premium is nowhere near the peaks toward 115% seen during early 2021.
For producers considering a purchase of either PTIC Cow or PTIC Heifers the decision appears pretty clear. PTIC Heifers have averaged about a 10% premium over PTIC Cows over the last few years, with a normal range between a 10% discount to a 31% premium. The current surge in PTIC Heifer prices during March has seen the spread premium increase to 44%, just shy of the historic peaks seen of around 50% seen in September 2019 and January 2021. The spread behaviour suggests PTIC Cows are better value than PTIC Heifers based on current relative pricing between the two cattle types.
In mid-April Episode3 are presenting a webinar hosted by Aggregate Consulting/MLA on the herd rebuild which will have additional pricing and spread information on PTIC cattle, cows with calves at foot and comparisons to other cattle types. Included will be an update on trends in female slaughter volumes, processor margins and cattle market price projections. If you are interested in hearing more be sure to register on the link below:
Productivity & Profitability Webinar (#36) Cattle market analysis – PTIC vs slaughter values