Processing

Northern, southern influences combine to drive beef kill higher

Jon Condon, 01/10/2013

 

The biggest Eastern States weekly kill seen in four months took market observers a little by surprise yesterday, when the National Livestock Reporting Service posted last week’s slaughter report.

The general feeling was that this year’s big drought-driven peak had now passed, but last week’s seven-day tally of 155,822 head was the largest seen since the week ending May 21, and indeed, was the fifth largest for the year.

The 2.3pc increase in numbers over the previous week was driven mostly by rises in the two largest processing states of Queensland and NSW.

While southern states were mostly back a little in weekly numbers, that adjustment masked a general strengthening in the longer-term kills in southern states, not unexpected at this time of year.

It was this combination of bigger drought-impact numbers in the north and the seasonal return to higher numbers in Victoria, South Australia and Tasmania that really underpinned last week’s whopper kill.

With little or no respite from the drought across western, central and northern Queensland, and western regions of NSW, processors are reporting renewed ‘waves’ of slaughter cattle coming forward, as affected producers reach decision-making points on second-round or even third-round herd reductions in order to cope with the prolonged drought effect.

Processors spoken to yesterday are starting to reflect on what happens if/when there is a widespread seasonal break across the north. There is a general concession that slaughter cattle will become very hard to come by, and prices could react strongly, virtually overnight, given a couple of inches of widespread rain.

“The longer it stays dry in Queensland the harder we are going to fall when it rains,” one prominent livestock manager said yesterday.

He predicted the supply vacuum, after the past eight nine months of sustained high kills due to drought, would see a lot of ‘dark days’ (shift cancellations) ahead in larger export-oriented sheds, or alternatively, longer closures than normal over the Christmas/New Year period.

“There’s nothing coming behind, because we’ve eaten into next year’s older cow turnoff, and even steers,” he said. “If you kill big kills, it inevitably means you will kill small kills, because it all averages out in the long run.”

If it stays dry, however, Queensland processors are predicting these big cattle numbers will still keep coming.

“They’re coming in waves, at present. Affected producers are getting to a date in the calendar, and it’s still dry, so they’re making tough decisions to offload a second or third time,” a key processor contact told Beef Central yesterday.

“Stock water is the other problem. More people are now running out of surface water, as well as feed. Let’s hope we get some respite before too much longer to take a little of the pressure off. Just some storms to break things up would be a godsend.”

The rise in kill numbers seen last week was reflected in a return to some weekend processing, with both boning room and kill floor shifts rostered for Saturday across quite a wide number of northern and southern plants.

Just some of the sheds known to have run a shift last Saturday include Wagga, Oakey and Naracoorte. Some of that weekend activity was driven by plants being behind on specific orders due to earlier rain, while others were driven by supply dynamics and some export demand.

Here’s last week’s state-by-state kill breakdown:

  • Queensland numbers crept back into the 80’s again, reaching 80,254 head, up 1pc on the previous week, and still 7pc higher than this time last year. Several large processors thought that could be the last Queensland kill above 80,000 for the year, however, given the short week next week.
  • NSW kills rose 3pc to reach 38,357 head, a whopping 17pc up on year-earlier weekly figures. While Qld has largely exhausted its female kill due to earlier activity (less than 34pc of last week’s kill was females), in NSW the proportion is still much higher, at 44pc, as the drought impact encroaches south of the border. Grainfed heifer turnoff may be accounting for part of that, processor livestock managers say.
  • Victoria was off 1pc at 24,294 head last week, but +32pc on a year ago
  • South Australia was -1pc at 8901 head (+13pc on a year ago), while
  • Tasmania was +2pc at 4016 head (+1-pc on a year ago).

NLRS manager Josh Anderson said he two largest slaughter states, Queensland and NSW, had remained consistently high in slaughter numbers this year, due to drought. 

"Producers are assessing stocking rates based on recent weather forecasts and electing to offload more stock, with reports of processors securing the majority direct. There have also been reports of processor buyers remaining active across a wide variety of eastern states physical markets, coupled with the increase in supply at selling centres ensuring kill levels remain consistently high.” 

Southeast Queensland processor grids have been remarkably stable over the past month, with no significant changes apparent in current grid rates for Teys, JBS and Nippon again last week.

Best money we could find in current SEQ grids this week was 330c for milk and two-tooth grassfed best ox, 325c for four-teeth, 315c for six-tooth and 305c for full-mouth ox. Best SEQ heavy cow grids this week are 285c, but falling away rapidly for lighter weights, while MSA grass steer has held up well at 350c/kg this week.   

Grids in southern Australia are basically all-square with those in Queensland this week, after earlier slipping behind by 5-10c/kg liveweight. While southern regions of Victoria and South Australia are in very good condition, its gets patchy in spots further north, and into NSW.

This current week’s kill is likely to see some customary ‘stockpiling’ occurring, to compensate for a lost day next Monday due to the Labour Day public holiday celebrated in most states, including the largest processing centres of Queensland and NSW.

Big sheds like Dinmore, Townsville and Beenleigh will all have dark-days next Monday, which will put a big hole in next week’s slaughter tally.

 

 

 

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