Beef slaughter rates in most states rose last week after earlier disruptions caused by widespread rain.

The National Livestock Reporting Service report for the week ending Friday (March 30) showed a solid lift to 131,202 head, a four percent rise on the previous week.

In Queensland, the state worst affected by earlier rain, throughput lifted 6 percent to 66,543 head, although it should be remembered that this was coming off a low-base the week previous, and is still some way from what would be considered a full kill (closer to 75,000 head).

Several large plants in Central Queensland like JBS Rockhampton and Teys Lakes Creek scheduled lay-days early last week due to lack of numbers, and plants like Dinmore in Southeast Queensland were also disrupted. Normal shift cycles returned this week, however.

Part of the rise in activity last week may be explained by processors seeking to stockpile some product in anticipation of the series of upcoming short killing weeks due to Public Holidays.

Four of the next five weeks are affected, with Easter (this week and next), followed by Anzac Day and Labour Day in early May (Queensland only). One or two plants may kill a public holiday or two, but most will have dark days on the gazetted breaks.

The supply/demand equation is now entering an interesting phase, with major Queensland processors all reporting that momentum in cattle movement is now starting to build.

Short weeks and subsequent killing capacity, combined with subdued demand in key north Asian markets, can only put further downwards pressure on cattle prices, in Beef Central’s opinion. The A$ still needs to shift a lot further south to have any appreciable impact on processor margins.

Expect to see some solid corrections in the finished cattle market over the next couple of months, as supply again moves ahead of international demand, and rain access issues are resolved.

Grid prices in Southeast Queensland last week took a big hit, declining 10c/kg in many categories as market factors other than rain took hold.

Most processors are currently talking 330-335c/kg for four-tooth Jap ox, 335-340c for milk and two-tooth, and 310-315c/kg for best cow. EU-eligible grassfed steers were generally quoted at 360c, MSA steer 360c, 0-2 tooth trade cattle around 335c, six- tooth steer 325c, and eight-tooth 320c.  

Most southern States followed the Queensland processing trend last week.

Numbers in NSW were up 8pc to 34,065 head, while Victoria was steady at 18,969 head. South Australia recorded the only decline, falling 1pc to 7194, while Tasmania rose a little to 4431 head.

Southern processors say slaughter numbers, particularly in Victoria, are now getting hard to come by, as the normal seasonal turnoff reaches its end. Expect to see more southern Australian plants scheduling fewer shifts, fewer cattle or dropped days in the near future.

Export meat markets mixed

US imported beef prices were steady to lower last week, on relatively light volumes, as many US end-users opted to sit on the sidelines.

“Australian packers appeared to have a bit more product to sell and in a few cases they were able to entertain a few lower bids,” analyst Len Steiner said.

The lower A$ was helpful in this regard (trading in the mid US103s to mid-104s last week) and even with the lower CIF prices, Australian packers were able to get about the same in A$ terms as they did a week earlier, at least for lean product.

Speculation continues to circulate in the US over whether the fallout from the Lean Finely Textured Beef debacle will have a negative impact on US consumer demand for beef, generally.

“We are not so sure at this point, as it is difficult to separate the seasonal effect of slower ground beef sales in late March (ahead of Easter) with the negative impact of news regarding LFTB,” Mr Steiner said.

“What we do know is that the price for fat trim in the US has been hit particularly hard.”

One of the questions being entertained last week had to do with the supply of lean beef that will be needed should a large portion of LFTB disappear from the US market.

BPI, the largest producer of LFTB, has suspended production in three of its four plants. It is likely that other producers of this product or similar products are affected similarly.

“Based on our latest estimates, total LFTB production in the US appears to be close to 181,000 tonnes per year. Some estimates peg LFTB at 227,000 tonnes/year, but we will go with the more conservative number. If 75pc of the LFTB demand is lost, this would imply that the US market needs to find about 136,000 tonnes of lean grinding beef to mix up with fat trimmings,” Mr Steiner said.

Will the US be able to use imported beef to replace this lost supply?

“Maybe, but only to a point,” he said.

“We find it difficult given Australian supplies at the moment, that Australia will be able to supply an additional 600 truckloads a month. Shipments from Australia will increase, but only if prices in the US continue to climb and make it possible to pull product from other countries.

“While the US has regained some market share in Australian grinding beef, higher prices will be needed to buy back more of it.”