Processing

Kill record broken again as tide of cattle continues

Jon Condon, 07/05/2013

Another week, another record Eastern States beef kill.

It has been happening with monotonous regularity this year, but the unprecedented flow of cattle out of parched regions of Eastern Australia has again set another all-time record throughput for the week ended Friday.

The National Livestock Reporting Service logged an Eastern States kill tally of just short of 158,000 head of cattle last week, eclipsing the previous record figure of 156,000 set a fortnight earlier.

A small part of that may have been driven by the short week a week earlier due to the Anzac Day holiday, which inevitably added to the current backlog of stock even more than would otherwise be the case.

Kills as high as this seriously question just how many more cattle the Eastern states processing sector is capable of handling in a seven-day cycle. Saturday shifts are becoming increasingly common, and the only other resort is working Sundays. That has happened in isolated cases in the past at a regional level – 2007 and 1997 were good examples – but many industrial awards include double-time provisions for Sunday operations, which would be absolutely prohibitive for most processors.

What’s driving the big national kills is not so much the huge numbers being processed in Queensland each week, but the record and near-record kills being recorded for this time of year in southern states.

Victoria, NSW, South Australia and Tasmania are all continuing to write some exceptionally large numbers for this time of year.

NSW last week hit more than 36,300 head, up a huge 28 percent from this week a year ago. Victoria was worse, killing 22,700 head last week, up 37pc; while South Australia was 56pc up on year-earlier figures at 8894 head. Much of that SA result is driven by large numbers heading south out of Central Australia, the NT and even western Queensland, as kill space back east becomes harder to find.

Even Tasmania was +20pc last week on this time last year, at 4642 head, due to the impact of the dry.

Exacerbating the situation in southern states is the fact that some large processors put cattle on feed earlier this year, anticipating that slaughter numbers would be hard to find by now, given any sort of normal season. Those grainfed cattle are now falling current, just as the big drought-forced turnoff reaches its peak, adding to the log-jam.   

The heavy emphasis on female kill was again evident in NSW last week, where cows and heifers made up 52.5pc of the state’s weekly tally. The number in Queensland was a little lower last week, at 40pc. Part of that easing may be due to the recent return to work of Kilcoy Pastoral Co, where the grainfed kill is heavily dominated by steers.

Queensland, the dominant processing state, again accounted for a near-record 85,443 head last week, up 38pc on this time last year. Under conventional circumstances, a number around 75,000 head is regarded as a ‘comfortable’ full kill in Queensland.  

The good news is that kills in southern states are likely to drop away quite markedly, as soon as there is any evidence of a widespread autumn break, which surely cannot be far away.

A front is forecast to pass through Victoria mid next week. If it eventuates, that could take the edge off the Eastern States record tallies chalked up recently, as southern states kills ease, suggesting the Eastern states peak may now be close to passing.

Any significant rain in the south would also help shore-up demand for restocking, giving store cattle somewhere to go.

Beef Central was talking with a prominent Tasmanian Angus breeder at last week’s Angus Australia annual conference near Wagga, who told us just how dry conditions were in his patch, not far from Launceston. That suggests the current drought event is a truly continental-scale weather episode, with producers in the extreme far north of Queensland in the same boat, and WA not much better.

It’s been said with monotonous regularity, but key livestock contacts at major processing companies again reported that Thursday/Friday last week was among the busiest they could remember for phone bookings and inquiries for slaughter space. Most plants are now heavily booked out into June and July, and even worse the further north you go.

 

Grid prices reflecting conditions

Meatworks direct consignment price grids are increasingly showing a vast gulf of difference in price between well-finished, in-spec slaughter stock, and everything else.

Premium lines have taken a hit, but nothing like the cow and manufacturing steer market.

“The price gap is as big now as we have seen for a very long time between standard grass and MSA-grass and grainfed prices,” one SEQ processor said.

There was a 50c/kg split evident in some SEQ grids yesterday, between MSA grainfed steer (355c/kg) and conventional grassfed yearling (305c). Grassfed MSA was 10c less, at 345c/kg.

“While there are big slaughter numbers moving at present, there aren’t necessarily big numbers of MSA and better quality cattle, and as a result that segment has held up much more strongly, price-wise” our processor contact said.

“There’s certainly a lot of cattle on grainfeeding programs at present, but a lot of those are northern cattle less suitable for MSA, so supply is likely to be tight,” he said.

While some grids have not moved in the past seven days, other have downgraded a further 5c across the board, while still others have been particularly harsh on cows, due to the over-supply situation. One large SEQ processor grid today has best cows sitting on 240c, about 15-20c down on a week ago, while another still has best cows at 265c/kg. Another large SEQ processor was not quoting on cows at all yesterday, such is their backlog of bookings, while a third processor has changed the mechanism of its cow grid: previously each downgrade step in weight was -5c from the ‘sweet-spot’, but is now -10c for each weight gradient.

As mentioned above, MSA milk and two-tooth grassfed steer yesterday were  being quoted SEQ at 345c/kg, with conventional 0-2 tooth steer 305-310c, 300c four teeth, 295c six-teeth, 275c eight teeth, 270c USA ox.

Processors generally are concerned about where they will get those better grading cattle come mid-winter, particularly if Victoria/NSW does not get an autumn break.

Agents at Roma are drawing for a further 9500 head at Roma store sale today, continuing a pattern of extreme large yardings at Australia’s largest store selling centre that started back in February.

 

 

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