Markets

MLA market briefs: 26 June 2014

Beef Central, 26/06/2014
  • Outlook suggests drier than normal season, despite delayed El Niño
  • Thursday daily cattle summary
  • Cattle market alert
  • Number of US cattle on feed continues to drop
  • Argentinean cattle slaughter eases
  • Brazilian beef exports to the EU lower in 2014
  • On-farm input inflation declines in NZ
  • More evidence to suggest US meat will not be cheaper any time soon

Outlook suggests drier than normal season, despite delayed El Niño – BOM

25 June 2014 The Bureau of Meteorology’s latest three month rainfall outlook covering the period of July to September suggests that drier than normal conditions are likely to continue for the remainder of winter and leading into early spring. The warming of the tropical Pacific Ocean over the past few months has set Australia up for the development of an El Niño in 2014, with these climatic trends generally associated with below-average rainfall in southern and eastern regions. Recent observations, however, have indicated that this warming has begun to slow. Despite this, the BOM maintains that climate models still point towards a 70pc chance of El Niño thresholds being exceeded this year, although the onset is now likely to be delayed until spring. These climatic developments have produced yet another disappointing outlook – across most of NSW there is less than a 40pc chance of exceeding the median rainfall level, with parts of the north-east inland less than 30pc. The outlook for both southern Qld and the southern NT is equally as poor, while rainfall across northern Australia (currently in its dry season) is likely to be average, if not slightly below. Northern WA has only a 40-45pc chance of a wetter than normal season, while further south the outlook is relatively neutral. The likelihood of a wetter or drier season is also roughly even across South Australia and Victoria, while eastern Tasmania is predicted to receive above average rainfall over the coming months.

Thursday daily cattle summary

26 June 2014 Qld: There were 25pc fewer cattle consigned at Dalby this week, at 3687 head, with most major export processors and feeder buyers operating, while restockers were less active on purchases. Medium C2 vealer heifers to slaughter orders were 6¢ dearer on last week, selling from 137¢ to 153¢, while light C2 yearling steers returned to the paddock 6¢ cheaper, to average 161¢/kg. Medium C3 yearling heifers to feed increased 13¢, ranging between 148¢ and 174¢, while medium D2 beef cow grades were up 1¢, to average 99¢/kg. NSW: numbers at Casino reduced 12PC compared to the previous sale, to 1623 head, with a large supply of medium and heavy weight vealers offered, as well as a fair yarding of cattle in plain condition. Light D2 vealer steers to restockers improved 13¢ on average, selling between 140¢ and 188¢, while medium C2 vealer heifers sold to processors 10¢ dearer, to average 152¢/kg. Light C2 yearling heifers to slaughter orders gained 7¢ on 141¢, and medium D3 cows to processors were back 4¢, to average 117¢/kg. Vic: Cattle yardings at Warrnambool this week were 25pc lower than last week, at 671 head, with quality mostly plain for yearling heifers offered, while not all the usual buyers operated. Heavy C3 yearling heifers to slaughter orders lost 4¢ on 175¢, while heavy C4 grown steers averaged 200¢/kg. Light D1 dairy manufacturing steers gained 6¢ week-on-week, to average 135¢.

Cattle market alert

25 June 2014 Total national cattle throughput so far this week increased 4pc compared to last week, to 34,142 head. The majority of the increase came from NSW, up 10pc week-on-week, to 15,767 head, with Wagga (4265 head) and CTLX (3410) yarding 17pc and 15pc more cattle, respectively. Consignments across Queensland eased 2pc over the same period, to 8786 head, while Victoria also declined, down 3pc, at 6220 head, with all reported sales penning fewer numbers. Cattle supply in SA was back 9pc on last week, at 1323 head, while throughput across WA’s Muchea (1906 head) and Tasmania (140 head) was up 23pc and 100pc, respectively, over the corresponding period.

Young cattle dominate with good feeder interest

Across the northern markets, feeder buyers showed strong support across young cattle, which continue to be available in the largest proportion, assisting prices on quality lines. Despite being selective on some purchases, restocker buyers reportedly provided strong support on plain conditioned cows, improving prices. Further south, young cattle made up the bulk of most yardings, although vealer numbers declined at Tamworth due to weaning, with buyers at Wodonga also struggling to capture adequate numbers. The fewer numbers penned at Wagga was reportedly attributed to producers holding onto stock due to large numbers expected, while there was firm demand from lotfeeders on well-bred secondary lines.

Number of US cattle on feed continues to drop

24 June 2014 The US feedlot industry continued to shrink during May, according to the US Department of Agriculture’s latest Cattle on Feed report, with 10.59 million head of cattle on feed as at 1 June. Since September 2012, every month has recorded a lower figure than the same time a year earlier (22 months in a row). During May, there was a drop in the number of both cattle placed in feedlots (with a capacity of 1000 head or more) and the number of cattle marketed. Of the cattle that were placed, there was an increase in light cattle (under 600lb), but fewer cattle at all weights above 600lb, suggesting that there could be a gap in the beef supply at the end of 2014 unless more heavy cattle are placed in the next two months. The decline in the number of cattle on feed and number of placements was not a big surprise to the industry, given widespread reports of difficulty for feedlots in finding suitable young cattle and the record high prices being paid for them (over 200US¢/lb).

Argentinean cattle slaughter eases

25 June 2014 Argentinean cattle slaughter has eased in 2014, with slaughter for the first five months of the year down 1.3pc year-on-year, totalling 5.04 million head (CICCRA). Underpinning the overall decline was lower cattle slaughter during May, down 2.9pc year-on-year, to 1.02 million head and female slaughter accounting for 45.5pc of the total. Production continued to decline driven by the lighter average carcase weight (218kg in May), totalling 224,000t, down 6.4pc year-on-year. The Argentinean government intervention earlier this year, limiting export permits continues to constrain beef shipments, with exports for the January to April period down 17pc year-on-year, to 34,978t. For the fiscal year to the end of April, Argentina has exported only 16,844t to the EU under the Hilton grassfed quota, or 56pc of its allocated volume.

Brazilian beef exports to the EU lower in 2014

25 June 2014 The weak Brazilian Real and strong international demand continue to help Brazilian beef competitiveness, with exports for the first five months of 2014 up 14pc year-on-year, to 500,000t. Despite the overall rise, shipments to the EU declined 15pc% for the same period, to 21,500t, mainly a contraction in frozen beef exports. Italy remains major destination for Brazilian beef in the region, and although chilled exports during January to May rose 58pc year-on-year, to 1053t, it wasn’t enough to compensate the 22pc decline in frozen shipments, to 7100t. Total beef shipments to Netherlands and Spain also declined 31pc and 20pc respectively. In contrast, exports to Germany rose 68pc, to 2525t, with a significant increase in chilled shipments, up almost three-fold, to 588t. The Brazilian beef export increase in 2014 has been driven by larger shipments to Hong Kong, Venezuela and Egypt and also by the recovery in exports to Iran.

On-farm input inflation declines in NZ

25 June 2014 Beef + Lamb New Zealand has recently released Sheep and Beef On-Farm Inflation 2013-14 – identifying changes in farm input prices in NZ for the various expenditure categories between March 2013 and March 2014. The inflation rate (or overall price change) is determined by weighting the individual input category price changes by their proportion of total farm expenditure. Overall, sheep and beef farm input prices declined 0.6pc year-on-year. Even though 12 out of 16 of the input expenditure categories increased in price and only four decreased, the size and weighting of the decreases outweighed the increases. However, in the longer term, the cumulative on-farm inflation over the past five and ten years to March 2014 was 2.9pc and 36.2pc, respectively. Fertiliser, lime and seeds registered the greatest price decline between March 2013 and March 2014, back 6.1pc compared to the previous 12-month period. Also experiencing a notable decrease was the overall price of interest paid on debt in the year to March 2014 – down 3pc year-on-year. On the other hand, the price of repairs, maintenance and vehicles increased 2.6pc on the previous 12-month period, and electricity was 4.9pc higher.

More evidence to suggest US meat will not be cheaper any time soon

24 June 2014 Frozen meat stocks in the US were generally much lower at the end of May compared with one year earlier, according to the US Department of Agriculture’s latest Cold Storage report. Most pork and poultry categories recorded lower availability, as did beef, while lamb/mutton was one of the few meat types to increase. Boneless beef stores were 23pc lower than last year, at 152,667t, and beef cuts were down 7pc (19,200t). Demand is reportedly still strong in the lead-up to 4th of July celebrations, which is keeping beef prices higher than normal for this June. Pork inventories were down 13, while poultry stores were down across all categories, relative to last year, except chicken breasts and breast meat, suggesting the huge demand seen for chicken breasts last year has come off the boil to some extent.

Source: MLA

 

 

 

 

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