Processing

Beef kill back 2pc, as processors consider limiting numbers to protect meat price

Jon Condon, 13/08/2013

 

There was a further two percent decline in throughput in last week’s Eastern States beef slaughter report issued yesterday, but the cause appeared to be more regional killing capacity and currency-movement related, rather than from any cattle supply change.

Queensland showed a sharp 5pc downwards trend in slaughter numbers last week, falling to 76,300 head, on top of a 3pc decline the week previous.

Local holidays surrounding Brisbane Show and Butcher’s Picnics was one factor, with sheds like Dinmore closed yesterday, leading to a reduction in numbers processed late last week so the plant could avoid a boning shift on Saturday, to give staff the full three-day break.

Some other Southeast Queensland factories were similarly affected.

Elsewhere, there were ongoing refrigeration problems (since resolved) at Borthwicks Mackay, which dropped production last week to avoid a backlog of product in cold-storage.

In combination, those factors put a handbrake on Queensland’s seven-day kill ended Saturday, which was back about 3000 head from a week earlier. In historical terms the kill remains large, however, being 7pc above where it stood this same week last year.

The same factors also suggest the current week’s Queensland kill may also be down, but several large processors predicted a bounce in the following week’s throughput, based on continued strong cattle supply. Most southern Queensland processors said they still had plenty of cattle around them for the next two to three weeks, and plants further north were still very busy, with solid bookings well into the week starting August 26.

Another factor in upcoming rates of kill might be demand driven. Several processors raised the current state of the export meat market – ‘awful’ and ‘terrible’ were two descriptors used – with grinding and muscle meat prices currently under ‘huge pressure.’

That’s being driven by two things: the sudden US3c rise in the value of the A$ last week, combined with general flatness in demand, and high local rates of turnoff.

Certain cuts like flats are proving almost unsaleable this week, some exporters said, as overseas customers gambled on a renewed easing in the currency value. One company’s costings went down 20c/kg dressed weight in a week, on what an animal was worth to them, relative to what they could get for the product.

“The job is under some real price pressure,” a large exporter told Beef Central this morning.

“Importers being who they are, will drive the market as low as possible, if they can see a way to make a dollar, and supply isn’t helping defend against that. We have to keep product moving, and can’t afford to keep product any more than two or three days, in many cases.”

Domestically, the wholesale environment was little better, struggling under the weight of volume with particular difficulty being experienced in selling strips, cubes and other barbecue items.

One multi-site processor said there was a lot of meat in the system, and his company planned to drop rates of kill in coming weeks not because of any lack of cattle, but to try to protect the meat price a little.

Given the volumes of meat in the market this year, the wholesale market has been remarkably resilient, however. Big discounting campaigns from Coles and Woolworths have probably helped in that.

 

August ‘heat wave’

Several processor livestock contacts also mentioned the unusual ‘August heat-wave’ being experienced across Queensland, with daytime temperatures across large parts of the state at or above 30 degrees.

Reports suggest that is expanding the area of impact of the prolonged dry further east, with the badly affected areas in western and northern regions of the state being joined by parts of the western downs and central Queensland that weren’t in bad shape earlier, but are now rapidly drying off.

Conditions could also affect oats crops and wheat in some areas, unless there is some relief rain soon.

One Queensland processor remarked on declining carcase weights as a symptom of cattle condition. Live weights from western cattle were now back 30-40kg at some of their plants – possibly more in some descriptions – compared with a more normal year.

NSW and Victoria were little-changed in processing activity last week, both rising 1pc to kill 36,700 head and 23,700 head respectively, as they continue in their lower winter cycle. Several smaller southern plants are currently in their winter seasonal maintenance closure phase, while others have retracted to four-day weekly seasonal rosters.

Going against the trend last week was South Australia, however, where the kill took a predictable 12pc rise, to 7100 head, as T&R’s Murray Bridge plant returned to normal operations after a seasonal closure. Tasmania recorded a 10pc decline in kills, to 3600 head.

There has been no significant change in public grid pricing among Queensland export processors this week. Processors continued to report a big inflow of grainfed trade and export cattle, due to big inflows of feeder cattle into feedlots three to four months ago caused by drought.

Currently, grainfed non-MSA 70-day steer is worth around 340c/kg in southeast Queensland grids, +10c for MSA. Grid prices for Southeast Queensland this week are around 300-305c for grassfed four tooth heavy steer, 310-315c for milk and two-tooth, and 255-265c best cow.

 

July kills up 19pc

In other slaughter data collected by NLRS, average weekly eastern states cattle slaughter during July was 19pc higher than a year ago, at 149,157 head/week. July was the eighth consecutive month where rates of slaughter were higher than year-ago levels.

“Given the favourable spring rainfall outlook, and after what have been huge consecutive slaughter months, cattle supplies are likely to ease in coming months,” NLRS said.

Underpinned by the drought-induced surge in slaughter and subsequent rise in production, national beef exports in July reached a monthly record of 106,000t, up 29pc year-on-year.

 

 

 

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