WHILE it’s not particularly unusual for this time of year, southern states beef processors are showing clear signs of putting the cue in the rack for the timebeing.

Rates of production in Victoria, South Australia and New South Wales are now well back on operations levels seen only a few weeks ago, as sourcing well-finished local cattle becomes challenging, and competitive positions against northern processors for northern cattle (until the last week or two, at least) started to widen.

Using MLA’s weekly NLRS slaughter report, it is clear that southern rates of slaughter are in decline.

As a result, Queensland is currently occupying a disproportionately large percentage of the adult national kill, as southern states retract. We’ve tried to avoid weeks where local state public holidays distorted the weekly trends.

Last week, (NLRS’s most recently-reported week, ending 26 June) Queensland (83,908 head) accounted for almost 54pc of the national kill on its own. Six weeks ago (w/e 22/5), Queensland’s percentage was a little over 52pc, while ten weeks ago, it was 51pc, and slipped into the 40s prior to that.

In parallel, southern states have shown a recent seasonal decline in throughput, accounting for smaller proportions of the national weekly kill.

Victoria’s last reported week (w/e 26/6) accounted for +15pc of the national tally, down from 17pc six weeks ago, and 18pc three weeks before that.

The NSW trend is similar, as southern winter cattle become scarce. Last week NSW represented +22pc of the national NLRS total, down from almost 26pc seven weeks ago.

Anecdotally, there are lots of reports of processors in southern states dropping days (six to five, or five to four), or reducing numbers per shift. One NSW plant we are aware off has dropped 1000 a week from its roster, while another has declined by 150/day.

Similar reports are coming out of Victoria, with scheduled maintenance closures (typically one to two weeks) happening in the weeks ahead in quite a few plants from South Australia all the way into NSW. Having said that, at this time of year it can get a little difficult to separate rumour from fact in terms of southern processing closures and reductions.

It’s starting to look like week 21, which ended 22 May, may in fact turn out to be the busiest beef processing week of the year. It accounted for 166,446 head, up 9pc on the same week last year. The industry may struggle to match those numbers once southern states’ supply starts to open up again, heading into spring.

Grids steady in the north, back 20c in places in the south

Recent 40-50c/kg declines in Queensland over the hooks grids have changed the southern processor competitive position somewhat over the past week or so, for the purchase of northern cattle.

One large southern processor told Beef Central yesterday his company had started to attract some interest from northern cattle vendors, as relative differences in price offers between north and south have started to close.

In the past few days, he had transacted 12 decks of 4-8 tooth manufacturing ox 600-700kg out of the Julia Creek district in Northwest Queensland. Two weeks ago, his company’s offer on those cattle was ‘uncompetitive’, but as Queensland grids started to trend down towards the end of June, his plant had picked up the business. Freight rate to get the ox back south was around 100c/kg, at around 380c/kg liveweight, representing low 8’s dressed. (Grid offers on eight-tooth ox are often equivalent to cow, but the cattle travel better in long-distance uplifts like this.)

After earlier sharp falls of 40-50c/kg, Queensland grids appear to have paused for a breather this week, showing steady on rates seen last Tuesday.

Some solid rainfall recorded across far western Queensland and into Central Australia (25-75mm was reasonably common, 30mm at Alice Springs, and north to Julia Creek falls of up to 20mm) has created some delivery problems for Queensland processors out of centres like Quilpie, but not enough to seriously disrupt processing operations, apparently. The normal Channel country turnoff window is still a couple of months away, meaning that country will dry out before the bulk of the cattle start to move.

In southern parts of the state, heavy cows this week are attracting offers of 710-720c/kg, and our standard four-tooth grass ox, 800c/kg.

Central Queensland rates are 20c behind those rates, with plenty of cattle now flowing across the heartland CQ cattle region.

Typical lead-times on bookings for Queensland plants are currently two, to two-and-a-half weeks for priced cattle.

In southern states, some grids (not all our regular contacts were available this morning) are back 20c/kg on last week, with heavy cows 780c/kg and grass four-tooth heavy steer 850c, in both eastern regions of South Australia and southern NSW.

Export manufacturing meat markets under pressure

On the export meat sales front, there’s plenty of evidence of ‘tough going,’ especially at the manufacturing meat end.

More product is being pushed back onto the domestic market, but as history has shown, Australia’s relatively small 28 million population is not capable of absorbing extremely large volumes of beef diverted out of export channels.

MLA has finally updated its weekly US imported 90CL cow meat price data, which was a month out of date up to a few days ago.

The latest entry for imported 90s for the week ending 3 July was A$11.06/kg, down 93c/kg or 8pc from its recent high point on 4 April. More on that trend in a separate article to come.

The trend is a direct reflection of the impact that China’s 55pc tariff is now having, and indirectly, Brazil’s impact in other export markets as it draws closer to filling its own China quota and starts to push meat elsewhere.