Slower turnover in Queensland took the gloss off an otherwise busy processing week in southern states, the latest NLRS Eastern States weekly slaughter report indicates.

The Eastern states weekly kill ended Friday produced a tally of 126,648 head, down about 3.3 percent on a week earlier.

Most other states produced increased kills, but Queensland, the largest processing state, went the other way, falling by 12pc to 60,991 head. There were a number of reasons:

• Monday last week was a Queensland Labour Day holiday, exercised in some, but not all Queensland sheds, depending on individual workplace enterprise agreements and other factors
• The continued closure of Nippon Meat Packers Australia’s large Oakey export abattoir due to industrial action. Barring any late developments, staff at Oakey are due to return to work this Thursday, May 17, after losing 14 working days since Easter. It is understood staff have now accepted the company’s original 4pc offer, including 10 minutes tolerance time in the boning room. Thursday’s first kill will see a roster of 945 head, growing steadily back to capacity of 1200/day. Over the period of the stoppage NMPA has diverted some cattle to the company’s Wingham plant in NSW, and found homes for some 100-day cattle through other channels.
• The Beef 2012 factor. As highlighted in an earlier report, the attendance of some 70,000 industry stakeholders at the national industry expo in Rockhampton last week had a distinct impact on cattle movements, especially direct supply to meatworks and some saleyards throughput.     

In southern states last week, the NSW kill reached 34,488 head, up 10pc on the previous cycle, but still 8pc shy of this time last year. Victoria’s kill was +5pc on the previous week at 19,433 head, while Tasmania was +17pc at 4864 head. South Australia went against the trend, easing 8pc to 6872 head.

Southeast Queensland grid prices have moved little over the past two weeks, after earlier upwards corrections due to rain and other influences. Despite the onset of winter, it is evident that many producers with abundant feed reserves are opting to hold onto cattle to optimise weight.

Expect SEQ grid offers this week around 360c/kg for EU steer; 340-350c MSA; 325c 0-2 tooth grassfed ox; 320c 4-tooth; 315c 6-tooth; 295c best cow. Mark down 10c on most of those rates for CQ plants.

Overseas meat markets

In overseas meat market developments last week, imported beef prices were steady to higher in the US on relatively limited volume and trading remained very thin in out-front markets. End-users were reluctant buyers during the week, opting to stay short-bought and mostly active in the spot market.

However, with imported values trading at a significant discount to the price of domestic product, some end-users have become more active, analysts’ reports out of the US suggest. Indeed, trading was slow to develop earlier in the week but appeared to gain in later stages. Prices by Thursday had improved 2-3c/lb on Monday.

“There are significant benefits for beef manufacturers to include imported beef in their formulations, particularly for those that are located near major shipping ports,” analyst Len Steiner, Steiner Consulting said.

By Thursday the price of domestic 90CL beef FOB Central US was quoted at $2.28/lb. Freight rates currently to the West Coast are around US8c/lb while freight rates to the US East Coast are about 11c. Considering that imported beef on an FOB Basis Philly is trading around US$2.12c/lb, the imported 90CL product is yielding a benefit of as much as 27c/lb over domestic supply, Mr Steiner said.

Another consideration was that imported product comes in frozen form, limiting the need to use CO2 gas for cooling-down the meat-block during the grind.

“All told, one could see as much as a US25-30c advantage in using imported beef in US East and West Coast, versus domestic fresh 90CL beef,” Mr Steiner said.

As US domestic cow meat supplies decline, it remained to be seen if imports would be able to fill the US demand gap. Australian beef shipments to the US have slowed down in April and are expected to be less than 20,000t in May. That volume still represents an increase from the limited supplies of 2011, but remains well below the five year average.

EYCI strengthens, then eases

A recovery in the Eastern Young Cattle Indicator over the past fortnight has been underpinned by rejuvenation in restocker demand, along with a contraction in available supplies, following the post-Easter influx.

A surge in supply towards the second half of April put downward pressure on prices, with the EYCI in late April reaching its lowest point for 2012, at 364¢/kg. Although the average during April (379¢) was 9pc lower year-on-year, it still remained 11pc, or 37¢, above the five-year average, MLA reported on Friday.

The majority of MLA’s NLRS eastern states cattle indicators increased last week, with heavy steers recording a gain of 15¢, to 337¢/kg. The trade steer indicator gained 7¢ week-on-week, to 376¢; medium steers continued their recent run of higher prices, moving 10¢ higher, to 340¢/kg, while feeder steers regained some of the recent lost ground, averaging 15¢ dearer for the week at 375¢.

At the close of yesterday’s market the EYCI lost some of the past fortnight's gains, finishing at 370.25¢/kg, down 3.25c on Friday.