Anna Holcombe, AuctionsPlus Market Insights
July 2, 2019
In previous research, the AuctionsPlus Market Insights Team found that the online market for young cattle was consistently above the EYCI in terms of price during July 2018 – March 2019 (See article here). However, what other factors also influenced a premium when selling online?
The AMI Team recently completed a comparison of the price outcomes of offering young steers by bid type, ranging from $/head, c/kg, or both. For steers over 250kgs, sold through AuctionsPlus throughout 2018 from NSW, VIC & SA, 86% of steers were offered as $/head only, while 9% were offered as both $/head & c/kg, and just 5% were offered c/kg only (see Figure 1).
When comparing the average c/kg live price received in each of the bid types, it was found that steers offered with both $/head & c/kg bidding available achieved a price premium over those offered only in $/head - averaging 15c higher (see Figure 2). Those offered in c/kg also sold significantly better than those offered solely as $/head, achieving an 11c premium. There was no significant price advantage found when offering steers c/kg compared to $/head & c/kg. When also considering the average weigh variation between each of the offerings, namely the lighter weights in those steers offered as $/head, it could also be assumed that the true premium of offering $/head & c/kg or c/kg could be even greater.
A major advantage of selling online is the ability to select how you wish to sell your animals, however this price premium strongly indicates that buyers are also willing to pay more for this flexibility. When speaking to a major South East QLD feedlot buyer, they expressed that they “always prefer to buy c/kg over $/head. With c/kg you get what you pay for”.
The buyer also expressed that the availability of c/kg bidding on lots gave them more confidence when buying. While some buyers, particularly restockers, may still prefer to purchase on a $/head basis, the ability to offer lots both ways provides the advantage of appealing to all buyers. On a 300kg animal, the 15c premium gained by adding c/kg bidding would equate to an additional $45 per animal. Considering this, the gain on just one steer would cover majority of the cost of weighing your cattle at most locations.