Kill rates stall as vacuum grows

Jon Condon, 05/10/2011

Further rises in meatworks grid prices, yet no significant change in rates of kill. It has been a familiar story across the Australian beef processing landscape since mid-August, and was repeated again last week.

Despite the flow of spring turnoff cattle gaining momentum in southern Australia ,the Eastern States weekly kill for the week ended Friday September 30 saw processing numbers rise just 1 percent  to 132, 603 head, according to NLRS data released yesterday afternoon.

Queensland’s kill was again dead in the water, returning 67,976 head – virtually unchanged from a week earlier, despite another round of grid price rises, albeit more modest this time, from major processors last week.

One smaller single-site southeast Queensland export processor took last week off, and at least one large shed had a ‘dark day’ last week as the restricted flow in cattle numbers in the north continued.

JBS and Teys raised their grids 3-5c/kg again on Monday last week on better types of slaughter cattle. Current SEQ grid prices are around 365c/kg for best grassfed bullocks 0-2t, best cow 345c, 365c grassfed trade steer.

In southern states, the kill story was little better. Last week’s NSW kill rose 2pc to 34,792 head, on top of a solid 8pc rise a week earlier. Victoria’s kill was up another 1pc to 18,611 head, also following a big seasonal turnoff-driven jump the week previous. South Australia rose 2pc to 7817 head, while Tasmania rose 16pc to 3407 head after some earlier soft weeks.

Priceless rainfall of 30-50mm across large areas of NSW and Victoria late last week had negligible effect on cattle supply, but might soften this week’s numbers, one processor contact said. He suggested the timeliness and extent of the rain would translate into “millions and millions of dollars” worth of value to beef and grain producers in the coming season.

NSW and South Australia will also have a short kill week this week, due to a Monday public holiday.

“It is evident that the higher livestock prices offered over the past six or eight weeks are not really bringing any more cattle to market, which increasingly looks like an indicator that the cattle just aren’t there as they would have been seen in previous years,” a reliable processor source told Beef Central yesterday.

“From a longer term perspective, it would indicate also that there is a herd rebuilding process going on, and that is evidenced by the lower heifer kill. While that is a positive in the longer term, in the shorter term perspective it is not so good for processors,” he said.

The prospect of Queensland now reaching a ‘full’ kill of 75,000-78,000 head per week any time this calendar year is now looking increasingly remote.

One category of note in current grids is MSA steer, which Teys is quoting 390c for Angus descriptions this week – as high as it has been in recent memory. That’s being driven by shortage of numbers, and the lower dollar. Domestic demand was

also a factor, but that could start to come off the boil as more southern spring-turnoff MSA eligible cattle started to hit the market.

Despite the recent reports of chronic exploitation of the EU grainfed quota system among ‘rogue’ importers, Australian supply chains targeting the EU trade have not lost faith, or confidence, that the problems will be resolved.

One supplier was quoting EU-eligible feeders yesterday at 220c/kg, 10c above equivalent conventional British-bred feeders – down a little on earlier premiums, which perhaps reflects a little more conservative thinking among EU lotfeeder/processors until the situation is resolved. Numbers going onto feed for the EU appear to have changed little since the quota access issue emerged a month or more ago.

• The NLRS Eastern States Young Cattle Indicator closed yesterday at 396ckg, up 2c on Monday. The heavy steer indicator (194.9c) was virtually unchanged from a week earlier, and medium cows were little changed at 150.9c.  


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