Despite a big surge in saleyard throughput across the Eastern states last week, processing activity remained at relatively subdued levels, in the face of earlier predictions of a solid rise in rates of beef kill during the second half of the year.
With 14 weeks (in practical terms) of the 2012 killing season remaining, forecasts of a lift in July-December processing throughput could soon come into question.
MLA during its mid-year update forecast a 1.9pc rise in the overall 2012 calendar year kill, but it’s important to remember, that was coming off a very low 2011 number of 7.26 million head.
The first half of this year in fact recorded a decline of 0.6pc on the same period in 2011, meaning the second half will have to get it’s skates on in order the reach the predicted tally.
Having said that, October and November normally register some of the highest rates of throughput for the year, as southern cattle start to flow again after winter, and northern processors receive bigger intakes as country dries off.
Last week’s Eastern States beef kill reported by the National Livestock Reporting Service reached 130,463 head – down 1.2pc or 1600 head from a week earlier, but about 2900 head better than the corresponding week last year (see Beef Central’s home-page graph).
Queensland’s kill last week eased 2pc to post a figure of 71,643 head. The female component improved a little from recent weeks to 30.5pc, but still stays at historically low levels, suggesting retention for herd rebuilding continues.
Most Southern Queensland processors last week pushed grid prices up 5c/kg across all categories, a sure sign that numbers of killable cattle are still pretty hard to find. At least two northern plants – one each in southern and central Queensland – said they were facing a reduced kill, or possibly a skipped shift later this week, as kill rosters remain harder to fill. An extra 5c/kg on offer in grids might help to avoid that.
Examples of SEQ grid prices obtained by Beef Central yesterday indicated ‘public’ rates around 335-340c/kg on milk and two-tooth grassfed ox, 330-335c/kg on four-tooth ox, and 300-310c/kg for best cow. MSA grassfed steer were quoted to a top of around 355c.
After a gradual slide in the value of the A$ over the past three weeks, reaching the low US102s on Thursday, there has since been an upwards correction again, reaching US103.33c this morning. That will start to erode any confidence exports might have mustered over currency relief, and could limit any further rises in grid offers in the near future, if it persists.
The NSW kill last week was unchanged at 31,477 head, still 2pc behind this time last year. Victoria was +1pc at 17,155 head; South Australia recorded a kill of 7321 head, down 2pc; while in Tasmania, activity rose for a second consecutive week, lifting a further 1pc to 2867 head, suggesting the restricted winter period may be starting to ease.
South Australia’s kill continues to be supplemented by flows of cattle out of central and northern Australia, but generally, southern processors still report a struggle to find killable cattle, with most suggesting the spring turnoff to start in earnest in another few weeks.
Big rise in saleyards activity
There were some substantial rises in saleyards activity reported by NLRS across eastern states last week.
Queensland yardings increased 30pc compared to the week previous. Just over 70pc of the cattle penned across the state were at Dalby, Longreach and Roma Store sale. Supply was up 22pc compared to the corresponding time last year.
In Victoria, yardings increased 14pc week-on-week. The largest increase to cattle supply came from Leongatha where throughput almost doubled. All the other selling centres yarded more cattle apart from Warrnambool. Quality remained plain across the majority of Victorian centres with many showing the effects of the winter months.
In NSW, saleyards throughput increased 30pc, with Inverell almost doubling the previous week’s performance, with more yearlings and grown cattle offered. Tamworth also reported a 70pc increase with lightweight yearlings in good supply. Dubbo yarded 35pc more cattle, while Gunnedah lifted 33pc and Wagga up 49pc, predominately due to the past dry couple of weeks.
Imported beef prices in the US were reported as steady last week compared to a week earlier. Generally prices by the end of the week were US2-4c/lb lower than where the week started, and market participants indicated that activity was generally spotty.
There was a sense that volume was light and Australian packers were more aggressive in looking for bids and willing to entertain lower prices. Prices drifted lower as the Australian currency turned weaker last week, although it turned sharply higher later in the week following the European Central Bank announcement of a new bond buying program to prop up the Euro and ease credit concerns.
Prices for US domestic lean grinding beef have held much better than earlier expected, largely because of fewer cows coming to market. Moisture conditions across much of the US have improved, with Hurricane Isaac bringing much needed moisture to the Southern US and along the East Coast. Some areas in the Midwest and Great Plains continue to struggle with drought conditions, however.
As a result US cow slaughter has declined and is currently running 10pc below year-ago levels.
Last year, there was a sharp increase in US domestic cow slaughter in late September and early October, with the weekly cow/bull slaughter approaching 160,000 head. It is unlikely that extreme will be repeated this year, but the expectation is for US cow slaughter to accelerate as producers prepare for the Autumn cow run.
Analysts say entries of imported beef will probably be down to about 6000t/week by the end of November – about half of what came into the country in the May-June period, but still notably higher than last year.
Australian shipments to the US in August reached 16,776t, some 20pc higher than a year ago, and early forecasts expect September shipments will be about 26pc higher than last year.
Demand for lean beef in the US is higher this year than last as larger quantities are needed to replace LFTB in retail formulations. Very low prices for fat beef trim also have pushed end users to try and get extra lean grinding beef.