Processing

Beef kill surge likely to be short-lived

Jon Condon, 26/02/2013

 

Beef processing operations across the Eastern States surged to another recent-record tally last week, but such high levels of throughput are like to be short-lived, given this week’s rain impact.

The National Livestock Reporting Service reported an Eastern States slaughter tally of 148,295 head for the seven days ended Friday. That’s the highest number seen since May 2011, and the seventh largest weekly kill recorded in the past three years.

Last week represented a 1.3 percent rise on the previous seven-day cycle, which itself set a 21-month record.

As discussed earlier on Beef Central, a mass exodus of stock from very dry interior areas of Queensland, NSW and Victoria has been driving the big surge in kills.

But the sharp rise is unlikely to last, with processors predicting the current widespread heavy rain event to have a sharp impact on this week’s and perhaps next week’s processing activity.

“Whether that decline lasts more than a few days will depend on how far west the rain influence extends,” one prominent processor said.

“At the moment it appears to be very heavy, but mostly coastal, meaning short-term disruptions in getting cattle to the meatworks. But if the rain can penetrate further west, even 50-75mm would limit paddock movements of stock for a longer period, and potentially reduce the pressure to sell in dry interior areas of Queensland, NSW and Victoria.”

“There will be booking cancellations this week – there’s nothing surer,” another southern Queensland processor said. “Even storm rain further west is creating some problems – the road from Injune to Roma was cut earlier in the week. If Rockhampton gets anything like the 300-400mm that is forecast in coming days, there will be a big kill decline again in Central Queensland,” he said.  

Last week’s big surge in numbers was again driven by a very large Queensland kill. The state’s tally of 76,774 is easily the largest this year, but was in fact surpassed by a higher figure as recently as early December, when dry conditions were setting in.

While last week’s Queensland number was certainly large by normal February standards, it was easily exceeded by three consecutive February weeks in 2011 (one week hit a near all-time record of 79,635 head), as the state’s processors raced to make up for lost time caused by floods and rain earlier in the year.

Last week’s strong Queensland result was assisted by Nippon’s Mackay plant, which returned to full operations after its three-week seasonal break. That made last week the first since mid-December that Queensland’s full complement of large export sheds have been in operation. Another factor was a Saturday shift at several plants.

For those areas further west where the current rain impact has been limited, or non-existent, the trend towards reducing numbers looks set to continue. Agents conducting Roma’s weekly store sale today drew for almost 10,000 head again, after numbers fell away to about 7000 last week.

Processors say there is still a lot of inquiry from western operators seeking direct consignment killing space.

“There’s still plenty of dry country out there, and a lot of western cattle still looking for a home,” one processor’s livestock manager said yesterday.

“A lot of those people in a tight spot are now saying even if they do get rain from now into early March, it is getting too late to produce any real grass growth before winter, so they will still have to lighten off,” he told Beef Central.

Southern Queensland slaughter grid prices have largely remained steady on last week’s rates, among the three largest processors at least.

While the range in grid prices offered among southern Queensland processors is still quite broad, indicative prices obtained by Beef Central yesterday included 0-2 tooth heavy ox 325-340c; 315c-335c for 4-6 tooth ox; 345c-360c for MSA yearling steer; 360-365c on EU steer, and best cows 300-310c. Grainfed quotes remain hard to obtain.      

The New South Wales kill last week was unchanged from a week earlier, recording 34,683 head, but again, that number is likely to drop this week as heavy coastal rain disrupts cattle supply.

Victoria lodged a kill last week of 23,790 head, up 1pc; South Australia was down 7pc to 8474 head; and Tasmania was all square at 4574 head.

 

Strength in MSA offers

If there is a highlight in the market at present, it is in solid premiums for MSA steers and heifers, driven somewhat by a shortening in supply in southern Australia as their season starts coming to a close. MSA prices are only like to firm further in coming weeks, one processor said, as eligible cattle become harder to get.

One large MSA processor in southern Queensland was offering a 25c/kg premium for eligible stock this week, up to 360c/kg on best MSA steers, while southern rates aren’t far behind at 355c/kg.

Prices like that reflect the current price disparity between direct MSA and saleyards cattle. A good example was seen on a large line of yearling grain-supplemented Angus x Brangus steers averaging around 480kg milk and two teeth sold at Dalby sale the week before last. The steers made around 170-180c/kg live, in a flat market, which were arguably 30-35c/kg, or +$100 a head off the pace from what they would have made if sold as MSA over the hooks.

“We still see a lot of cattle coming through the knock box that would be ideal for MSA, but don’t have the paperwork, or accreditation,” one processor said. “There’s still obviously a long way to go in terms of getting that message across, and the vendors concerned are missing out on some very big pricing advantages,” he said.

 

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