A big surge in saleyard numbers across North-eastern Australia this week is flagging the start of ‘serious’ herd downsizing in areas of Queensland, the NT and northern NSW that have missed out on summer rain this year.
Today’s Roma store sale is expected to yard close to 11,000 head, and other big numbers are being put together at selling centres like Longreach (+4000 head), Wagga (4000+ yesterday) and Dalby this week.
One meatworks livestock buyer said he could not recollect bigger yardings at some centres in the past two years – at least since the seasonal cycle started to change for the better in 2011, and particularly at this time of year.
It’s a sign that northern and western Queensland producers facing deteriorating paddock conditions and dwindling surface stock water have waited for rain long enough, and are pulling the trigger.
One large multi-state process this week suggested there was a ‘wall of cattle’ starting to come out of western areas which had missed out on earlier rain. While other processor contact this week were less dramatic in their descriptions of cattle flows, all conceded that supply inquiry had jumped substantially in the past week.
Some processors are limiting forward bookings to two-weeks ahead, being wary of getting stuck with cattle in early March that might look expensive, based on today’s figures.
The big slump in beef kills experienced a fortnight ago due to the effects of ex-cyclone Oswald may have masked the cattle supply trend, with eastern states slaughter number last week showing a dramatic 43 percent rise.
The Eastern states slaughter report compiled by the National Livestock Reporting Service logged a seven-day kill to Friday of 138,308, up from 96,000 a week earlier.
Weather disruptions due to earlier rain was obviously the biggest factor in that change, but supply side pressure also contributed, processors said.
All states bar South Australia showed large double-digit growth in kill numbers last week.
Queensland rose an unbelievable 89pc in a week, to 66,302 head, as plants got back to work after earlier rain-forced closures.
The New South Wales kill rose 23pc to 34,505, while Victoria also lifted 16pc, to 23,844.
Tasmania also dramatically lifted its weekly kill, jumping 28pc to 4719 head, while South Australia lifted 4pc to 8938.
With the exception of Borthwicks’ Mackay plant which remains closed as part of its annual three week maintenance shut-down, all Queensland processors were back to work last week, as conditions returned to normal after the soaking the week previous.
Mackay will return to work next week with its first kill on Wednesday, and its first boning room shift on Thursday.
Grid prices for southeast Queensland plants were mostly steady to 5c/kg softer last week, but more questions are likely to be asked by processors in the next week or two. The exception was grassfed MSA money, which went up 5c on a couple of grids, reflective of the fact that the best of the southern Australian kills for the season might now be behind them – both quality and volume wise.
While the range in grid prices from site to site is still quite broad, indicative prices obtained by Beef Central yesterday included 0-2 tooth heavy ox 325-340c; 315c-335c for 4-6 tooth ox; 335c-360c for MSA yearling steer; and best cows 300-310c. Grainfed quotes were hard to obtain.
Several processors said individual consignment numbers were tending to be smaller at present, but all the two and four-deck consignments being received ‘added up to big numbers’. Supply areas west of Roma and Emerald, and into Northwest Queensland were most active, and some consignments this week were showing signs of the seasonal circumstances.
One contrasting view came from a senior pastoral company contact spoken to this week, who sees the current cattle movements linked as much to cash flow requirements as desperately dry conditions.
“In many areas, I don’t think it is that dry yet that producers have to be selling store cattle. I think the big store movements now starting to be seen are to raise some money. Cash flow is, in my opinion, a bigger driver behind the prices for light cattle seen from late 2012, to where we are today,” he said.
Another pastoral company which apparently has plenty of cattle marketing work ahead of it over the next five months is the Australian Agricultural Co. Speaking during the company’s recent financial results briefing, chief executive David Farley said the company had held-back some 180,000 trading cattle last year to add weight to in 2013. The intention is to sell into a market this year that it predicts will improve following recent rains – better aligning with the price gains seen on the global market.
The distinction between AA Co’s circumstances and the general cattle turnoff now being experienced is that the majority of AA Co’s immediate turnoff is likely to be in good slaughter condition, rather than backward due to the effects of dry conditions.
Rather than selling light or younger cattle this year, the company says it is more likely to be a buyer – albeit not in the numbers seen in 2011 and 2012 when it bought tens of thousands of grower cattle to utilise the feed resource in the Channel country and elsewhere.
The company’s turnoff cattle between now and July will be drawn both out of the company’s Channel Country holdings, as well as the Barkly, and, via feedlot programs at Goonoo, Aronui and custom-feedyards.
That sales program is now underway, with early deliveries in the past fortnight or so.
AA Co’s Barkly country has had a ‘decent’ break this year, but will be looking for more rain in February/March to make a season. The forecast for the next fortnight looks quite encouraging to deliver on that.
While the company’s channel country is generally patchy, and not as good as it was in the two years previous, there had been some good falls during spring, but now needed follow-up. Individual channel properties like South Galway were in quite good shape.
Not far away, though, Channel country properties relying on groundwater for stock rather than poly and troughs are getting to a serious position.
Overall, unless there is further big rain further north around Longreach producing beneficial flooding across the Channel Country, there will be nothing like to huge stocking-up across the Channels region that has been seen over the past two years.
That Channel Country demand put a good floor in the store market in 2011-12.