The signals have been brewing for some time, but last week saw the dyke break in the face of an avalanche of cattle from parched inland areas of Queensland, the NT and NSW hitting the market.
Meatworks grid and saleyards prices took a pounding in some cases; a near record weekly kill tally was logged for Queensland; and the Eastern Young Cattle Indicator has slipped 12c/kg as a result of the big cattle flows, as western and northern producers activate sell-down programs.
Perhaps the biggest surprise of all last week was the extraordinary size of Queensland’s weekly kill, which at 81,601 head was within a couple of deckloads of the state’s all-time record, set way back in July 2001. That’s 12 years ago.
Anything above 75,000 head is considered to be a ‘comfortable’ full kill for Queensland, and some contacts were struggling this week to understand how such a large number could be accommodated.
The answer lies in the strategies of some northern, central and southern Queensland plants, including Lakes Creek near Rockhampton, doing weekend shifts, while others, like Nippon’s Oakey export plant on the Darling Downs, has lifted weekday shifts to 1155 from the normal 950, by changing manning numbers on the kill floor. Oakey also did a weekend boning shift to keep up with its expanded kill floor productivity.
Not surprisingly Southeast Queensland grid prices have lowered sharply in the past week – in some cases back by 20c/kg, but more commonly 10-15c. It’s been three to four years since 20c/kg adjustments have been seen in direct slaughter rates, in one lump.
Southern Queensland public grid prices quoted to Beef Central yesterday included 320-325c/kg for milk and two-tooth ox; 315c/kg for four teeth; 310c/kg for six teeth; and 285-290c/kg for best cows. Even the quality end has been dragged back, with MSA steers down to 355c/kg.
Quotes in Central Queensland were typically 15c/kg below those rates.
Average carcase weights are now clearly starting to reflect the impact of the season, several processors said yesterday.
Also reflecting the big flow of cattle, Roma store sale tomorrow is expected to draw for another +10,000 head yarding, on top of an even larger yarding last week. Some smaller Queensland selling centres exposed to western cattle like Blackall are considering two-day sales, either this week or next, to cope with numbers.
One prominent export processor yesterday told Beef Central that his company’s livestock buyers had been “slammed” with cattle this week, with slot bookings now heavily subscribed until mid-to-late April.
Heavy demand for direct consignment meant the company’s buyers would not be doing a lot of saleyards business this week. Another large export processor has basically pulled up offering quotes, holding ample bookings until well after Easter. Cattle were coming from anywhere west of Emerald, west of Charters Towers, and west of Roma.
Complicating matters further for processors, next week is a short week due to Good Friday, and the following week is similarly affected by the Easter Monday holiday, which will substantially reduce processors capacity to keep pace with the volume of cattle being put in front of them.
“There’s a lot of cows out there, and forced sales due to the weather, which is no good for anyone,” one processor said. “Three good seasons in a row has contributed to the build-up in herd numbers, which has been heavily exposed this year once things turned bad, season-wise.”
The only factor limiting even greater numbers of cattle being turned off was access to livestock transport. “They can only truck as many cattle as they can get wheels for,” he said.
“That might have a moderating effect on the numbers of cattle seen in coming weeks. Probably 81,000 head is as many as Queensland processors could every handle in a week, regardless – particularly with labour access the way it is.”
Road Trains of Australia Mt Isa depot supervisor, Mike Bailey, said his company’s prime movers and dogs were now booked solidly weeks in advance, with cattle moving in big numbers out of the Barkly, the Gulf of Carpentaria region and northwest Queensland.
“They’re going to feedlots, meatworks and into saleyards depots like Longreach. We don’t normally kick off until after Easter, but we are as flat as a strap right now,” he said.
‘Every truck is on the road, pulling those cattle out of areas that have not had any wet season,”
“We’re moving +100 decks this week from places around Urandangie, on the NT border, and another 70 off places on the Barkly,” Mr Bailey said.
Making matters worse at the meat sales end of the processing business, the A$ has kicked 1.5c against the US$ in the past week, after hitting US104c over the weekend, and opening at 103.98c this morning. That movement is again working against the competitiveness of Australian beef exports.
In areas further south, there was also a strong surge in NSW kills last week, up 7pc to 34,994 head.
The year-earlier comparison also warrants attention, with NSW up a colossal 28pc last week compared with this same week last year, while Queensland was up 14pc.
The only aspect stopping last week’s overall Eastern States beef kill reaching a two-year record was Public Holiday stoppages early last week in Victoria, Tasmania and South Australia.
Victoria’s kill last week was back 16pc to 19,127, and Tasmania’s back 21pc to 3711 head, as a result. Factor in a five-day kill in those southern states, however, and the Eastern States weekly tally would have easily exceeded 150,000 head for the first time in at least three years.
Meat & Livestock Australia chief analyst Tim McRae said the kill figures clearly illustrated the volume of cattle coming into the market, but also the volume of beef leaving for export markets.
“Half-month totals for March indicate that China will have another massive month in terms of beef shipments from Australia, while total exports to ‘other Asia’ (excludes Japan, Korea, Taiwan) are sitting just below Japan for tonnage as at March 14,” Mr McRae said.
That last statistic is an important one to note for Japanese meat buyers, in Beef Central’s opinion, because Japanese traders are notorious for trying to beat-up Australian meat salesmen on price whenever there are signs of cattle oversupply in the Australian market. Having strong alternate markets to Japan is the best way to avoid that prospect, and ‘other Asia’ is starting to do a fine job in achieving that.
While the patchiness of the season throughout Queensland made it difficult to give a blanket assessment, Mr McRae said with the wet season ‘window’ now drawing to a close, there were some regions that clearly had registered a very poor season, now making some offloading decisions, in preparation for what was shaping up as a very tough year.