Processing

Weekly kill: Cattle prices continue rapid descent, as labour crisis comes into play

Jon Condon, 21/03/2023

FIRST signs emerged this week that the labour crisis afflicting beef processing operations is having direct impact on cattle prices – for both slaughter and feeder types.

Some Queensland and southern grids have slipped as much as 30c/kg on slaughter cattle this week, on top of earlier hefty drops.

Quotes from competitive Queensland processors obtained this morning have 580-595c/kg on four-tooth heavy grass steer with HGP, and 510-530c/kg on heavy cows. Some of those quotes are back 10c in a week, while others are as much as 30c down, depending on positions the week before.

Central Queensland offers are 10c/kg behind those rates.

In southern states, quotes have 615-625c/kg grids for four-tooth steer and 500-510c for heavy cows, some of which are back 30c/kg on Friday’s rates.

Some observers anticipated that the market might strengthen a little last week, with the rain that was around, but the general trend for slaughter and store cattle was cheaper, north to south.

Labour key limiting factor

A popular theory started to emerge early this year that given current levels of labour resourcing, there was a ‘natural ceiling’ presenting in Australian processing of around 115,000 to 120,000 head of cattle a week.

The past three reported weeks (week ended 17 March has not yet been provided by NLRS) have been in the high 112’s to low 113’s, suggesting the limit is now within sight.

“There might be a little bit more in the system, but not much,” one large multi-site, multi-state processor said this morning.

“If MLA’s herd projections are to be believed, we’d have to kill 140,000 head a week this year, and we’re only killing a few over 110,000. Add slaughter and live export together, and Australia generally turns off 31-33pc of opening numbers each year. To achieve that, we need 140,000 a week, but we won’t go close to that.”

“Killing capacity will ultimately control the cattle market from now on,” another contact said. “It’s the key limiting factor, overtaking export meat prices and demand, and even the weather as a key influence in cattle pricing,” he said.

“Any surplus supply above what the processing industry can handle is going to create real problems.”

Forward bookings well covered

Processors in Queensland are clearly well supplied with slaughter cattle at present, with some now only taking bookings for the other side of Easter.

Others export processors in Queensland are not quoting at all this week, suggesting they are well covered heading into the sequence of holiday shortened working weeks.

Any disruptions to kills caused by rain last week are now gone, and may have only added to current supply challenges, because cattle booked prior that had to be substituted because of weather are now pushed further back in the roster.

Feeder market also starting to be impacted by processing capacity

Feeder cattle prices are also starting to be impacted by processing labour constraints, several large stakeholders believe.

Quotes seen this week for flatback heavy feeders for 100-day programs in Queensland have offers are 370c/kg liveweight or less, and continuing to trend down.

One large Darling Downs grainfed supply chain has offers out for domestic flatback feeders this morning at 335c/kg and heavy feeders 355c. See last week’s report on big losses being sustained in grainfed cattle.

“The smarter feeder cattle buyers are now taking the industry’s likely forward kill capacity into account in their purchasing of feeders,” one supply chain manager told Beef Central this morning.

“It’s drifting backwards through the chain to the feeder cattle a lot quicker than I thought it would,” he said.

“There is little point putting a steer onto feed now if you are going to struggle to find a home for him at the meatworks at the end, in June or July.”

“But there’s not likely to be a huge surplus of feeder cattle out there this year. The available numbers won’t grossly outweigh the available cattle – and in some cases, producers with feed in front of them will take young cattle through and finish them in the paddock.”

“Some of those feeders may have blown-out on weight (500kg limit for export programs), as the feeder market started to decline, and people held cattle back hoping it might turn around.

“Some of that is not planned – it’s just the way things have worked out. Weights have surprised a lot of people this year.”

 

 

 

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Comments

  1. John Cocker, 23/03/2023

    Genuine questions.

    Processors need to remain viable. Is the current issue an artefact of a short term excess level of supply into processing?

    What % of processing total capacity is controlled by the top 5 processors? And what % of that is foreign owned?

  2. James Goddatd, 22/03/2023

    Well I think that may plan took these things into consideration this time so I have nothing in the slots for those three months and all will be set to go in after or prior to needs. But I already have my next two years plan on place, only thing that can change is drought or rain and either will effect to negatively. Plusost cattle or at least select lines aredroght tolerant to a good degree. They hold weight well and put it on quickly till weaning then slack some but not to much. Hope things work for all of us I been doing this for generations and I’m really only doing a very small herd these days as I’m not young anymore.

  3. Jerry case, 22/03/2023

    We prducer finally get a leg up and then here comes the packers with some labor shortages just like the mad cow disease. I told some producers the other day someone is going throw a wrech in this market I have barely got it out of my mouth and here comes comes labor shortages This market is not g g oing to ever get right until the producers have a stake in the packing facilities like cooperatives I Know of se viral groups working on this at the moment hope & pray they can get it down if not they want be a need for packing facilities because their want be any producers left to raise any cattle hope I am wrong

  4. Matthew Swainston, 22/03/2023

    Well, we as farmers have been done over again.
    Our prices slowly climbed to a sustainable level, something that we hadn’t seen for many, many years. It was nice to be properly rewarded for our efforts.
    Then everyone jumped on the bandwagon thinking we’re going to be a part of this.
    Our input costs have gone up so now we’re back where we started from.
    Regulations & beauracacy is killing us.
    To put it bluntly more & more people are frustrating less & less.
    But let me tell you something.
    We only have ourselves to blame. Australian farmers do not know the meaning of the word Unity.
    We & our representatives need to wake up & it needs to happen soon.
    The best example would be our live export industry & our two agricultural lobby groups in WA.
    They reckon ther united in their fight to save live export so why is one leader in Canberra & one on a tractor in WA.
    That is not working together

    • James Goddatd, 22/03/2023

      Well I’m not sure about live exports, but I never did get why we sent lives to China and then shipped them back as carcases. And now we’re facing in all likelihood having to go into slaughtering our own herds to keep up demand and keep the processing going so we’re not buried in heavy cattle.

      For the record, James, beef has never been shipped from China to Australia. Editor

  5. Jenny James, 21/03/2023

    A short lesson on why we need live export

    • Jenny Brown, 23/03/2023

      NZ producers are making the transition away from live exports

    • David P Cass, 22/03/2023

      Here here Jenny
      If livestock was never put on a boat the Australian meat industry would not exist

      • Howard Gardner, 22/03/2023

        The lives help export trade is essential for Australia’s sheep/wool industry to remain profitable. Whilst I was involved in meat exporting I lived in the Middle East for 6 years. During that time I became convinced of the importance of the live sheep trade. Reflect on M/E religious requirements and you will understand the receivers cannot sacrifice a carcase—it has to be alive to enable a sacrifice.

        • Jenny Brown, 23/03/2023

          Do you really think sheep should be sacrificed?? If people in the Middle East want to eat sheep send them carcasses,processed here with some oversight of animal welfare standards.








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