The Eastern states beef kill took a predictable hit last week, driven by the combination of the Queen’s Birthday holiday on Monday, and the residual effects of earlier rainfall across a wide expanse of Eastern Australia.  

The National Livestock Reporting Service logged a four-state kill of just 118,963 for the seven days ended Friday. That’s a drop of 15,350 head, or 13pc in a week, from a previous kill that was already quite modest in size.

All states were impacted. Queensland’s tally reached 64,568 head, a 9pc decline on the previous week, despite some processors scheduling a shift on the holiday Monday.

New South Wales was back 16pc to 27,193 head due to weather-driven supply issues, winter crop planting activity and the holiday influence. Victoria was negative 10pc at 17,070 head, South Australia negative 12pc at 6302, and Tasmania negative 17pc at 3830 on the week before.

Grid prices start to ease

A resurgent A$, which hit a one-month high above US101c yesterday, has been a catalyst for a 5c/kg drop in some southern Queensland processor grids in recent days.

Teys Australia grids adjusted yesterday afternoon, and Nippon’s late last week. eep in mind that grid adjustments from processor to processor are a ‘moving feast’ and often can reflect competitive adjustments, between players, rather than establishing a new pricing benchmark.

In balance, it has been a remarkable stable period for grid prices recently among Southern Queensland processors, with some grids not changing at all for the past four weeks, before the latest easing.

Typical SEQ grid prices quoted to Beef Central yesterday included four-tooth grassfed Jap ox 315-325c, milk tooth 325-330c, cows 290-300c. MSA steers sat at 335-350c for grassfed at the top of the tree, although one major packer had temporarily withdrawn quotes on MSA due to adequate current stocks. EU steers are currently around 360c/kg.

The seasonal shortage of killable cattle in southern Australia is now in clear evidence, with southern grids prices around 10c above those further north. Southern processors like Monbeef, Throsby, Bindaree and Midfield are now operating in Queensland’s clean country markets on a more regular basis, attracted by the differential.  

The A$ reached US101.4c briefly yesterday afternoon, a 4.5pc rise since the start of June. Financial commentators say the reason is some renewed optimism (perhaps better described as relief) over European economic conditions, and the weekend election outcome in Greece in particular. Commentators are predicting the cautious optimism to be short-lived, however, given the range of challenges faced in the Euro-zone, suggesting the A$ may soften again soon.

Another factor behind the most recent grid movement has been the easing in price for lean grinding beef into the US from recent highs, and the tough environment for selling grilling cuts like striploin and cube-roll on the domestic market. Some of those items are currently finding their way into export, at a discount, making overall carcase value margins tighter.

While easing slightly on April, heavy steers saleyards prices in May increased 2pc year-on-year, averaging 331¢/kg. Medium steers (330¢/kg) and medium cows (268¢/kg) averaged slightly lower in May against the same time last year, declining 1pc and 3pc respectively. A steady flow of heavy cattle out of western and central Queensland direct to processors has impacted buyer demand at saleyards, along with sluggish export conditions.

With the onset of first big frosts in some areas of central and southern Queensland over the past week, supply pressure is now showing reals signs of building, putting further pressure on grids in coming weeks.

Individual plants in central and southern Queensland spoken to in the past 24 hours have reported ‘enormous’ cattle bookings this week. Some are now fully-booked two weeks out, and likely to extend further. One prominent Queensland plant booked 6000 head of slaughter cattle yesterday, alone.

The relatively slow start to the 2012 killing year could see numbers increase substantially in coming months. As outlined last week, Queensland’s kill for May was back 9pc on the same month last year. The average weekly four-states slaughter so far in 2012 has averaged 119,445 head – 3pc below where it was at this time in 2011.

So far in June, weekly kills have again been down 1pc, 3pc and 5pc compared with corresponding weekly kills last year.

Even to achieve a ‘breakeven’ relative to the 2011 calendar year’s slaughter, suggests some bigger processing weeks lie ahead. Barring further rain disruptions, Beef Central sticks with its June 5 prediction that the week starting June 25 will be one to watch for the year’s biggest kill so far.   

There is a growing anticipation of a backlog of slaughter cattle that must be presented to market some time over the next three or four months, at relatively heavy weights.

MLA is forecasting Australia’s third quarter beef kill (July-September) to rise significantly to around 1.95 million head, and continue strongly into the fourth quarter. The forecast suggests total national kill this year to reach 7.55 million head, up about 290,000 head on last year, due mainly to sustained seasonal conditions and live export cattle diversion into processing channels.       

Overseas markets

In overseas market news, imported beef prices in the US continued to trade softer last week, with prices generally steady to lower compared to a week earlier. Trading volumes remained thin, which is not all that unusual for this time of year.

Most market participants continue to complain about limited end-user demand for out-front orders and the inability/unwillingness of importers to buy significant supplies for delivery in July and August. That is not to say that some product is being bought that way but the imported beef pipeline has become a lot smaller these days and it is unlikely to change in the short term.

Beef supplies from New Zealand are expected to decline sharply, as cattle slaughter there begins its normal seasonal decline. Cattle slaughter in NZ for the week ending June 9 was 50,760 head, 2.6pc higher than the previous year but 22,000 head lower than what it was in late May.

Australian shipments to the US in June are also expected to be limited, reflecting demand issues. Current estimates put Australian June shipments to the US at about 14,400t, about 16pc lower than a year ago.

• The Eastern Young Cattle Indicator averaged 369¢/kg during May, falling 3pc on April and 6pc year-on-year. Greater supply and weaker competition for young cattle underpinned the decline in price. Both the domestic feeder steer (207¢/kg) and trade steer (362¢/kg) prices eased 4pc year-on-year. The EYCI closed yesterday at 371.25c, down 2.5c on Friday and back 4.25c on a week earlier.