November 10, 2011
JBS to withdraw from calf sales next year
JBS Australia has announced that it will not buy back grounding cattle next year.
The company rationalises its business operations following claims made by regular buyers and re-stockers that JBS' extravagant purchase of 40,000 calves last year has eliminated the company from the market.
Australia's biggest lot feeder, JBS, bought 22,000 weaners for back grounding this year, mostly from the major January calf sales in Victoria and South Australia. Industry sources put the investment at AUD36million (US$37million).
Solid demand for boxed beef from Argentina, Chile, Brazil and Russia has resulted in JBS bolstering feeder steer numbers from 8000 to 9000 head a week.
JBS national feedlot manager, Michael Doyle, said while the company wouldn't buy at the sales, it would have a presence.
"We want to build relationships with those people who buy the cattle and want to sell on to feeder and slaughter rates," Mr Doyle said.
Wodonga agent, Trevor Parker, said the JBS presence at last summer's weaner sales had left many buyers "shell-shocked".
But he did not expect its withdrawal to affect the looming weaner sales, citing plenty of cattle-industry confidence.
Albury agent Steve Paull said re-stockers would be better able to compete at next year's sales in the absence of JBS.
"This is telling us it hasn't been a financial success for them and they are going back to their core business," Mr Paull said.
"It did create a very strong store market which couldn't be sustained by the finished prices in the feedlot."
Albury auctioneer Michael Unthank said the absence of such a major player would soften the weaner market but the market would remain stable.
"The grass fatteners have been so much stronger and if we relied on one player in this game we would be in trouble," he said.
Hamilton agent Heath Templeton, of Southern Grampians Livestock, said he was unaware of the JBS withdrawal.
However, Mr Templeton said he did not think "one buyer will make any difference to the strength of the market".
Coleraine cattle producer, John Kane, who sells at the Western District calf sales, said "back grounders that were blown out of the water by JBS last year, will be as active as ever this year and prices will be healthy".
JBS considers the European Union market outlook to be "bullish" with declining European herd numbers and protein shortages. Its six feedlots have been EU-accredited in anticipation of product being diversified away from the traditional export markets of Japan, Korea and the US.