Processing

Momentum grows in turnoff numbers, as situation turns from bad to worse

Jon Condon, 12/03/2013

 

While this week’s Eastern States slaughter report is yet to be completed due to slow access to data because of public holidays in southern states yesterday, there were some big holes evident in kills in Queensland and New South Wales, where NLRS data was provided.

That was due to widespread wet weather early last week along the Eastern seaboard, leading to a brace of lost days in plants from Rockhampton south to NSW as cattle proved hard to source.

The Queensland kill for the seven days to Friday fell 6 percent on a week earlier to 68,760 head, while the only other state where a report is so far available, NSW, saw numbers come back 4pc to 32,795.

That trend can be regarded as just a small pothole in the slaughter cattle supply highway this year, however, as the prospect of mass exodus of big numbers out of parched inland and northern areas of Queensland, New South Wales, and the Northern Territory continues to grow.

Some scary numbers are starting to emerge, as desperate producers in the west start to unload, at all costs. The nation’s largest weekly store sale at Roma was drawing for more than 12,000 head today, while the weekly Dalby sale looks likely to yard +9000 and Longreach, 6000 head.

Even smaller centres further south like Inverell are drawing for 2100 head this week, agents said.

“There’s just cattle coming everywhere,” one large multi-site processor livestock manager said yesterday.

Several large processors spoken to yesterday indicated that they had more or less a full book for the next fortnight, and one has virtually ceased quoting for direct consignment cattle, obviously in the expectation that prices will fall by the time it clears forward bookings.

Further north, JBS Townsville is heavily booked until May. That tends to be a littler exaggerated, however, one northern stakeholder said, because it is customary across some northern plants to book ‘space’ rather than a ‘price’. That means some producers book ‘slots’ for the same cattle at more than one plant, as a form of insurance, and some of those ‘slots’ can become available closer to slaughter date.

In southern parts of Queensland, some processors are ramping-up kills as cattle supply pressure grows. Nippon Meat Packers Australia’s Oakey shed, for example has lifted shifts to 1155 from the normal 950, by changing manning numbers on the killfloor. Theoretically, that could add another 1000 head to Oakey’s weekly tally, provided the sums add up at the meat sales end.

Saturday kills have been discussed at some Queensland plants which do not normally function on the weekend, but that often comes at the cost of considerable labour overtime penalty rates.

Some sheds, however, like JBS Rockhampton and Townsville, conduct weekend shifts as a matter of course, during times of year when they are required.

But simply killing more cattle is not necessarily the answer, some processors said.

“We have to try to protect the value of our meat, in international and domestic markets,” one contact said yesterday.

“Simply killing more cattle, when the meat market demand is not there, is dangerous, because it can force down price. Cold storage facilities full of meat puts a lot of pressure on the meat marketing department, especially when big markets like Japan, Korea, Russia and Indonesia are so flat.”    

Another large multi-site processor yesterday said his phone had ‘run hot’ with cattle placement inquiries this week, covering the full spectrum from heavy ox to boner cows.

The surprising thing is how robust southeast Queensland’s direct consignment grids have been in the face of that momentum, with little change in grid prices compared to a week ago. That perhaps reflected the need by processors to throw out some ‘fancy money’ during the wet last week, in order to fill kill rosters.

But it is only a matter of time before there are some big shifts in rates on cows and other lines, it would appear. Bullocks currently worth 320-335c could be worth considerably less by the end of this week at southern Queensland plants.

Unless there is substantial rain across interior areas soon, it is inevitable there will be very large numbers of slaughter cattle coming forward over the next three to four months.

Complicating matters, they will emerge at a time of relatively high feedlot turnoff, as large numbers of dry cattle placed on feed late last year fall current.

Another factor in the processing industry’s ability to handle a wall of cattle coming towards it will be the upcoming series of short weeks, caused by public holidays. There will be two consecutive four-day weeks either side of Easter in late March, followed by another in April coinciding with Anzac Day.  

All that will heighten the access difficulties for killing space, in an already crowded market.

 

     

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