News

Early slaughter cows may be 50-100c/kg underpriced, meat trade data suggests

Jon Condon 15/01/2025

BOOMING prices being recorded for Australian lean frozen beef trimmings being sold into the United States and other markets suggest slaughter cows being sold in the early stages of 2025 may currently be 50-100c/kg under-priced, data prepared by Elders this week suggests.

Elders business intelligence analyst Richard Koch has produced the graphs published below, showing a widening relative price gap between export manufacturing meat prices and cows being sold in Australia (c/kg dressed weight basis).

While supply will always have a strong bearing on cow prices in the market, the graphs suggest the relative price gap has rarely been wider over the past 24 years.

Previous spikes in the spread (reference 2014 and 2019-20 in the graphs) were clearly linked to big surges in cow turnoff during drought, producing over-supply and moderating cattle prices relative to the meat market.

The most recent US imported lean trimmings price posted 10 January was another all-time record high at A1065c/kg CIF basis, or US299c/lb when measured in US currency. The current price is around A300c/kg higher than it was this time last year.

Mr Koch said US imported lean beef prices had gained almost A70c/kg in the past few weeks, taking the margin between export prices and cows to near record levels and over double the long-term average.

Cow supply in Victoria was now looking limited, with many producers offloading cows when last year’s spring rain did not materialise. Expanded processing capacity in the region last year also contributed, pushing Victorian processors north into Queensland for long periods last year to source slaughter stock.

“We just need to see a bit of a slow-down in local (southern) slaughter for the processors to start competing away some of this margin,” he said.

“Southern processors will likely run out of local cows to kill early in 2025 (due to local producers having already culled herds) forcing them north in the next few months,” he said.

The difference between manufacturing beef prices and cow prices started detaching from each other in mid-2023 after slaughter began rising, pushing up against processing capacity, Mr Koch said.

“High slaughter levels were maintained throughout 2024 as producers adjusted to tough seasonal conditions in the south by offloading breeding stock. Once local (southern) slaughter levels ease, our cow prices should start to move back in-line with export beef price trends,” he said.

As reported yesterday, saleyard price trends on cows have started strongly this year, but have been somewhat erratic, with prices this week in some selling centres well down on first sales last week.

Strong sales with cows above 300c/kg liveweight were seen at Mortlake and other selling centres last week.

At Dalby sale this morning, around 450 cows were yarded in an overall offering of 4800 head. Mediumweight score 2 cows averaged 264c, up 13c on last week, while heavyweight score 3 cows averaged 295c, down 8c on last week. Better finished score 4 heavy cows averaged 308c.

Further south, there was a softer trend evident in cow categories at Naracoorte yesterday compared with last week’s vigorous opening sale, with heavy score 3 cows down 26c/kg to average 299c, and score 2 heavy cows averaging g 247c, down 62c on last week.

The NLRS Processor Cow Indicator has surged since 2025 reporting started on 6 January, rising from around 278c in late December to 294c/kg yesterday, on turnover during the past seven days of 10,600 head. The overwhelming majority of those (84pc) were heavy cows +520kg liveweight. Current cow indicator prices are at their highest since September last year.

 

 

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Comments

  1. warren hunter, 02/02/2025

    Hi John
    It was great to see someone finally show the price margins that our meat processors have in place. Over the last 2 years this has increased.
    I’ve worked in a meat works and while all the profits are generally from beef sales, there is never any mention of profits made from offal, fetal blood, blood and bone, tallow and hides etc
    Graziers do not get paid for any of these but they all contribute a sizable profit over and above their beef sales.
    Can you please let us know what dollar amount this would equate to please.

    Thanks for your comment, Warren. Processors tell us they take all material of value harvested from a carcase into account when determining what they can pay for livestock. It certainly is not just the edible muscle meat, but includes all the by-products etc you describe above. Also worth pointing out, cattle hides are today worth only a fraction of what they were in earlier times. Demand has declined for high-value leather car seats etc, and synthetic leather has stolen much of the conventional leather market. As a result many cattle hides that were once worth $60-$90 now end up in landfill. Editor

  2. Marcus, 18/01/2025

    Rang around for pricing Tuesday on 100 cows direct to abs southern NSW and Victoria. Killed Friday at $6/kg. I have never struck such a short lead time.

  3. Roger McFarlane, 15/01/2025

    Jon Condon deserves a lot of credit by exposing the export operators thieving billions of dollars from the Australian cattle farmers. This has been going on for years, but at long last they may be exposed.

    Worth pointing out, Roger, is the fact that there are often long periods when slaughter cow supply is tight (herd recovery after drought, for example) when processors in fact lose money – we have seen examples of losses of +$200/head on cows. Why would they kill cows at a loss? A bunch of reasons – maintaining long-standing valuable export customers, and plant staff retention among them. Have a look on the graph at how narrow the price gap has been at different times in the past. It would not go close to covering COP. Editor

  4. Andrew Dunlop, 15/01/2025

    So where is the premium for table beef (heavy steers) over manufacturing beef (processor cows)?
    The gap is sitting at 60c per kg, but your article suggests cows are underpriced by 50-100 cents.

    Some would say a rising tide floats all boats, Andrew. Editor

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