The long and short of it

The Detail

Queensland dominates the feedlot industry in Australia with around 60% of the nations cattle on feed at present. Using Queensland centric inputs to the feedlot gross margin calculator we have taken a look a a selection of feed regimes; short fed, medium fed and long fed, to see how the respective margins are holding up.

We have allocated the short fed trade at 105 days on feed, medium fed is at 155 days and the long fed regime at 200 days in the feedlot. However, before we delve into the respective feed regimes we have taken a look at the average margin across the three regime types in Queensland.

The long term trend since 2003 highlights that the average margin sits at $83 per head profit, with a normal range between a $44 margin loss to a $210 margin gain throughout the period, as identified by the 70% boundary. This shaded area represents where the feedlot margin has fluctuated for 70% of the time since 2003. As demonstrated by the 95% range, fluctuations beyond a loss of $170 per head and above a profit of $340 per head would be considered extreme.

During the 2021 season the Queensland feedlot gross margin has averaged $177 profit per month per head of cattle on feed for the January to August period. Monthly average margins peaked in February at a $300 per head gain and the August margin sits at a $116 gain, marginally above the seasonal low seen during June of $114 per head.

Analysis of the seasonal pattern for the 105 day short fed regime demonstrates a relatively solid start to the season, with the first quarter of the year registering above average profit margins of approximately $120 per head. Margins followed the 2020 pattern in autumn with a dip into negative territory before staging a recovery toward parity during winter.

The current short fed gross margin sits at a $15 profit per head for August, which mirrors the annual average short fed margin for the 2021 season, thus far. Longer term margin statistics for the short fed regime highlight that the average monthly margin usually fluctuates between a $50 profit to a $130 profit per head of cattle on feed. The shaded 70% range demonstrates that movements in the margin throughout the season are normally seen between a $50 loss to a $230 gain.

The monthly average gross margin for the 155 day medium fed regime has remained in positive throughout the 2021 season, despite displaying a narrowing trend over the year, thus far. The margin peaked at $400 profit per head in February and recorded a low ebb of $30 profit in July. The margin for August has rebounded to a profit of $144 per head and has registered an annual average margin from January to August of nearly $190 gain for the season, thus far.

The longer term gross margin statistics for the medium fed regime signal that average monthly margin pattern has a slightly wider range in fluctuation than the short fed trade, with movements between a profit of $60 to a profit of $165 per head noted. Normal fluctuations in the margin throughout the season range from a loss of $70 to a gain of $280 per head, as outlined by the shaded 70% boundary.

The gross margin for the 200 day long fed regime has performed quite well for much of the season, sitting above the normal range from January through to July and only dipping into the normal region in August with a margin of $190 profit recorded. The seasonal peak and trough for the long fed trade have occurred within a month of each other with July registering the high point, thus far, at a profit of $454 per head. The annual average margin on the long fed regime for 2021 sits at a gain of $328 per head.

Long term seasonal statistics for the long fed trade demonstrate that average monthly margin pattern can vary between a $70 to $190 profit, a wider fluctuation than the medium and short fed regime. Normal seasonal fluctuations in the long fed trade can range between a loss of $90 per head to a profit of $350 per head over the year.