Processing

Slaughter rates show little change

Jon Condon 23/10/2012

There was little change evident in processing rates across Eastern Australia last week, with the exception of Victoria and Tasmania where plants continued to re-emerge from their winter seasonal slowdown to post higher throughput.

Nationally, the beef kill for the week ended Friday collated by the National Livestock Reporting Service reached 139,889 head, up about 1.2 percent on the week previous.

While the kill was up 2.4pc on the same week last year, it continues to lag behind five year averages for mid-October. Overall September/October kills this year have tracked close to last year’s rates, with the exception of the week affected by the new Queen’s Jubilee holiday this year.

Queensland’s kill last week reached 74,649 head, barely 1pc higher than a week earlier, while the NSW kill was unchanged at 33,714 head.

Southern states results saw another 5pc increase in Victoria, where spring cattle turnoff is now gaining momentum, reaching 19,529 head; South Australia was -1pc at 8126 head; and Tasmania was +12pc at 3871 head.

Domestic demand still flat

With daytime and evening temperatures now warming-up in most regions, domestic wholesalers and retailers are hoping to see a kick in demand and price for grilling cuts, as barbecue season draws closer.

One large wholesaler with a presence in all three eastern states said demand for striploin, cube roll, eye fillet and rump had been disappointing so far this spring, but momentum was expected to grow heading into November.

Wholesale prices for grilling cuts dropped significantly during winter, due partly to flat export demand and domestic consumers shifting more to ‘comfort food’ based on secondary slow-cook cuts.

Processors will be counting on better returns for sweet cuts in coming months to build overall carcase value, particularly while there is no great surplus of export-diverted beef sitting in cold storage for dispersal through the domestic trade.

The recent rise in Victorian kills has put a little more domestic beef into the market in recent weeks, particularly in carcase form, but the stagnant nature of Queensland and NSW kills is not putting any real supply pressure on cold storage inventories at present, sources say.  

One processor remarked this week on the stronger recent performance in export trade into the US, despite the persistence of the A$ value above US103c over the past couple of weeks.

Latest data suggests that total Australian beef shipments to the US in October could be close to 19,000 tonnes, representing a 50pc jump from year-ago levels. High US lean grinding beef values have encouraged more trade out of Australia, as has the modest softening in the currency rate, and the high volume of Brazilian beef now going into Russia, in place of Australian trade.

Demand out of Korea and Japan continued to remain flat last week, with Japan driven by the local importers’ thought process surrounding prospects for cheaper US beef, should the current 20-month age rule be relaxed in coming months. This was discussed in more detail earlier on Beef Central.

China growth promising

If the is a positive sign in the North Asia region currently, it was the continued encouraging demand signals coming out of China.

On top of record trade figures for the month of September, shipments to China are again shaping up strongly for October, a leading exporter told beef Central yesterday.

Australian exports to China in September surged 366pc year-on-year to 4060 tonnes, DAFF trade figures showed. That was only 27pc below the yearly total for 2010, while exports for the first nine months of 2012 totalled 9746t are already well past total shipments last year (7754 t).

Almost all the Australian beef shipped to China during September was frozen product, however chilled beef exports last month were also 58pc above the same month last year.

So what’s sparking the current demand shift out of China?

“There’s two things that have occurred,” a respected exporter servicing the market told Beef Central yesterday.

The first was that the avenues for access for US beef into China have been shut down, because of the ban surrounding disputation over the use of ractopamine, a leanness enhancing beta-agonist.

Secondly, the so-called ‘grey trade’ into China via neighbouring countries like Vietnam was now much more difficult and heavily policed.

“Combine that with the emerging middle class in China, with the consequent movement across to beef from other proteins when consumers have disposable income, and it is not that surprising,” the exporter said.

“It is probably more of the former, rather than the latter, but there’s no reason why that trade growth should not continue. And it’s across a broad range of cuts – it’s not just a single item or trim.”

Grids unchanged

There was no significant change evident in processor grid prices in the past seven days in the nation’s largest concentration of processing capacity centred on southeast Queensland.

One large export processor said there were “plenty of cattle about,” and there was little real supply-side pressure evident from a processing perspective.

In a rare move, one large Queensland processor has not operated in the state’s saleyard system at all for the past week – possibly for the first time ever – such was the flow of direct consignment stock to company plants.

Depending on what happens weather-wise, most processors spoken to yesterday felt that slaughter numbers would follow current rates through to Christmas/New Year holiday closures. Some Queensland plants would lose a day due to a Butchers Picnic holiday gazetted in coming weeks, however.

Some northern plants, like Teys Biloela, now have only five weeks of operations left before the annual holiday break sets in. Biloela historically closes earlier than other plants, but also opens earlier in the New Year.

 

 

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