Processing

Beef kill backs-off, as heat wave sets in

Jon Condon, 04/12/2012

There was a substantial drop in the Eastern States beef kill last week, as a series of supply-side impacts took effect.

The National Livestock Reporting Service logged a seven-day tally for the week ended Friday of 139,935 head, 2.2 percent below where it sat a week earlier.

That’s not that surprising through, as the previous week, ended November 23, was in fact the biggest Eastern States kill this year (143,070 head), and the highest number seen since May 2011 when processors were furiously killing cattle to make up for earlier flood and rain disruptions.

The single biggest change to processing patterns last week was seen in Queensland, where the kill eased 5pc to 71,778, down from 75,300 in the previous cycle.

The primary reason was a scheduled week-long maintenance closure at Brisbane's Australian Country Choice plant near Cannon Hill, which does not skip time over the Christmas/New Year break, unlike many Queensland processors. That’s because ACC’s sole customer, Coles Supermarkets, requirements change little over the festive period.

The loss of ACC for the week accounted for around 5500 head, which fits quite neatly against Queensland’s statewide decline recorded for the week, suggesting other processors continued to operate at close to capacity.

The female portion of the Queensland kill continued to track higher than earlier trends, reaching 32pc last week.

The flow of cattle out of far western Channel Country regions has now dried up for the year, with most larger pastoral companies spoken to yesterday consigning their last shipments over the past fortnight. The weekly Cattle-train rail service out of Quilpie has now done its last scheduled run for the year, meaning any remaining Channel Country stragglers since late November are coming by road.

There were only isolated changes to over-the-hooks grid prices reported by major processors in southeast Queensland over the last seven days. One multi-site processor bought better cows back 10c/kg, and further for plainer descriptions – in deference to the fact that per unit processing costs on growing numbers of lighter cows make them less attractive. Expect to see slaughter cow numbers rise in the run through to Christmas in Queensland, particularly of conditions stay dry and hot.

Barring widespread rain, grids are unlikely to change much as the Christ closure draws nearer, one stakeholder said.

“Processors are reluctant to lift prices close to Christmas, because there is an underlying expectation among some livestock suppliers that prices simply pick up the following year, where they left off in December – despite the two or three-week break in kills,” Beef Central’s contact said.

Expect to see Queensland’s weekly slaughter tally start to ease from next week, as the start of the holiday season closures kick-in. Teys Australia Biloela will be the first to pull-up for the year on Thursday this week (kill-floor) and Friday (boning room). In turn, Biloela will be among the first to start in 2013, to keep pace with other plant closure cycles.

In southern states, the NSW kill was unchanged at 44,662 head last week; Victoria and South Australia grew 2pc to 21,886 and 8484 head respectively; and Tasmania eased 4pc to 4125 head.

Another possible impact on kills recorded this week could be the heat wave conditions which are currently moving across parts of eastern Australia. Temperatures above 39 degrees C, or 100F in the old language, could see producers taking necessary precautions in shifting cattle this week, until the worst of the weather has passed.  Several processors thought that could be reflected in the current week’s kill performance.

  

Saleyards activity

There was a generally easing price trend across Eastern Australia’s saleyards system last week. In Victoria, throughput at Bairnsdale was steady, with buyers competing in a cheaper market. Heavy yearling D3 steers slipped 6¢ on average to finish on 153¢ while the better quality heavy grown steers averaged around 175¢/kg, NLRS reported.

Numbers increased at Queensland’s Roma prime as the dry weather prevails across the region. Heavy C4 grown steers averaged 172¢, while the majority of the bullocks sold from 166¢ to 175¢. Medium D3 cows averaged 129¢, back 5¢ while heavy D4 lines sold from 134¢ to 152¢, back 4¢/kg on average.

Dubbo had reduced numbers, with heavy grown C3 steers to slaughter unchanged on last week’s prices making 169¢, while bullocks sold from 162¢ to 172¢/kg. Heavy D3 cows topped at 138¢ to make 136¢, back 3¢.

 

Overseas beef markets:

Imported beef prices in the US were higher again last week, but trading volume remained light.

In part this reflects the fact that Australian packers will start to close for maintenance and holidays in the next couple of weeks, re-opening in early 2013. New Zealand will likely continue to produce, as slaughter there increases but plants there also will close for the holidays.

Overall, market participants expect imported beef availability to be relatively light in the next few weeks. Spot supplies are already very light and those that were caught-short have been pushing the market higher. One indication of the tightness is the notable decline in Australian shipments to the US market in November (See Beef Central’s separate report this morning on November export performance).

 

 

HAVE YOUR SAY

Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.

Comments

Get Beef Central's news headlines emailed to you -
FREE!