While there was an entirely predictable crash in the Eastern States beef kill last week, not all of it can be blamed on the extensive and heavy rainfall across parts of eastern and northern Australia.

Export processors are again taking more defensive positions on cattle prices and rates of kill, based on losses associated with an A$ again hovering between US103c and 104c, and continued flat demand out of major markets like Japan, Korea and the US.

One export processor budget examined by Beef Central yesterday suggested losses above $100 a head on grassfed ox +300kg carcase weight slaughtered in southern Queensland this week at purchase prices around 325c/kg.

Despite the recent rain-driven shortage of cattle, that prospect is prompting export processors to deliberately wind-back kills, as the demand-side impact is felt. This is illustrated by Nippon Meat Packers’ decision to have a dark-day at its flagship Oakey plant in southern Queensland this Friday – a move that is entirely market driven, not weather related.

In many ways, recent weather circumstances reducing access to cattle and propping-up cattle prices has masked the true market signals being sent from the demand side.  

At the domestic market level, processors attempting to shift export cuts back onto the domestic market appear to have over-run demand, with isolated reports of ‘fire-sale’ wholesale prices on PR-cipher grassfed striploins as low as $5.00 reported this week. Reports out of the cold storage sector suggest that many rooms are currently holding big chilled and frozen manifests, mostly export backlog. Traders are mopping-up some of this supply, but at a price.

Last week’s eastern states kill reported by the National Livestock Reporting Service saw a tally of just 114,484 head – the fifth lowest weekly number for the year, exceeded only by the two weeks affected by Easter, and two others in early January when kills are traditionally slow.

A report like that often sets the phones ringing on the international trading desks at major processors, as Japanese and other North Asian customers hit the panic button.

Queensland suffered the biggest impact, down 15pc on a week earlier to 57,908 head. The next largest processing states, NSW and Victoria both saw 5pc declines in numbers, to 29,405 head and 17,310 head respectively.

Tasmania was down 10pc to 3382 head, while South Australia recorded the only rise, up 7pc to 6479 head.  

The reduction was widespread, with every Teys Australia plant from Biloela and Rockhampton to Beenleigh, Wagga and Naracoorte in the south missing a day last week. Beenleigh and Biloela in fact only killed three days. The only Teys site left unaffected was Tamworth.

Similarly, JBS was hit hard by the weather last week, with Dinmore operating a series of half-day shifts last week – caused by a combination of cattle supply and industrial action. JBS Townsville dropped a few hundred head due to breakdowns, but that was not supply-related. Nippon’s Oakey plant missed a kill on Friday, and the Mackay plant’s operations were also rain-affected.  

Looking ahead, Teys’ Wagga site will close this Thursday for a fortnight, for an extension to the slaughter chain, installation of a new computer system and general maintenance. Supermarket supply normally derived from Wagga will be serviced out of other Teys sites. Nippon’s Wingham plant in NSW will also close for two weeks, immediately after July 31, as part of a normal seasonal closure for maintenance.

Heavy rainfall last week through eastern Queensland and northern NSW again played havoc with saleyard activity. Following huge saleyard cattle offerings a week earlier, Queensland yardings last week contracted 59pc to 8850 head – the third lowest weekly offering logged by NLRS for the past year. Saleyard numbers were also back in NSW and Victoria (down 23pc and 20pc respectively).

Influenced heavily by tighter cattle access, heavy saleyards steers nationally averaged 3¢ higher, at 351¢/kg, while medium steers jumped 9¢, to 343¢/kg.

Grid prices in the biggest concentration of export meatworks in southern Queensland followed a similar trend. Rises of 5-10c/kg set by one processor a week prior were met by 5c rises from most competitors last week. On current rates, expect to see prices around 325-335c/kg on four-tooth heavy ox; 335-340c on milk and two-tooth; and best cows 290-305c.    

Killable MSA cattle were particularly short recently, with one processor briefly spiking their offer to 380c, to catch-up, but the market has since settled to rates around 345-355c for grassfed MSA steer. Another processor said while there was not a lot of MSA cattle around, the quietness in the domestic market suggested bigger numbers ‘were not really wanted.’  

Current grid prices are seeing solid bookings emerge as country starts to dry out, plant livestock managers report, suggesting kill numbers will elevate strongly in coming weeks. One processor estimated this week’s Queensland kill would restore to the high 60,000 range.  

MLA’s half-year projections forecast of a rise in processing rates on the back half of this year now looks like a safe bet.

• See this morning's separate international market report