While it's still not yet too late for a significant turnaround in summer seasonal fortunes across Eastern Australia, processors are acknowledging the prospect of a drought-affected 2013 slaughter cattle season.

After two ‘dream’ processing years when the flow of well-finished slaughter cattle was nicely spread-out across the year, and continued well into December, a continuation of current dry conditions this year would inevitably condense the flow of good quality slaughter cattle into a tighter window. This would inevitably put pressure on prices.   

A late-breaking summer wet season would be a lot better than no season at all, but it inevitably condenses the grass-growing season into a shorter period before the onset of cold weather, reducing weightgain potential in cattle, processor contacts pointed out yesterday.

“You don’t generally see a big excess of slaughter cattle coming forward until forced sales set in,” one multi-site processor said. “When people can still afford to sit and decide the ‘market is not particularly good, we’ll hold-off for another month’, the flow of cattle tends to look after itself. But it’s when they run out of water and feed that the thinking changes to ‘exit at all costs’,” he said.

Circumstances may not yet have reached that point, but it is on the horizon unless weather patterns turn around in many cattle areas.

Symptomatic of the unusually dry season were reports yesterday from two processors of slaughter cattle coming out of the far western Channel Country – a highly unusual, if not unprecedented event for January. Most appeared to be leftovers from last year, being shifted to ease up numbers, should things stay dry.

‘Unless we see widespread soaking rain, I think we will find that many producers will be keen to get cattle moving as soon as possible, because cattle aren’t going to get any better, weight-wise, and potentially might start to slip,” one processor said.

“Labour might be the biggest issue, as many bigger places might not yet have sufficient staff back from leave to do the job.”

Last week’s Eastern States beef kill continued to slowly re-activate after its summer holiday closure period, lifting another 10,000 head to reach 117,841.

All states were up from the previous week. Queensland’s kill lifted 14 percent as more of the larger export plants returned to work, reaching 46,877 head for the seven-day cycle.

Teys Australia’s Lakes Creek and Beenleigh plants were among the last to get their 2013 seasons underway, doing their first kill on Friday, and first boning room shift on Monday.   

While less affected by seasonal closures, the NSW kill also rose 10pc last week to post a tally of 34,218. Of significance was the proportion of female kill in NSW, comprising 51pc of the total, suggesting seasonal pressures exerting an influence.

Victoria’s kill last week rose 4pc to almost 24,000 head; South Australia was +6pc at 8223 head; and Tasmania +6pc at 4567 head for the week.

Despite the dry weather, early 2013 saleyard numbers have not yet risen dramatically, with about 4500 booked for Roma sale today. Queensland recorded around 13,000 saleyard cattle for the week ended Friday, NSW, 22,000 and Victoria, 13,400, according to NLRS data.   

Grid prices show softening trend

The absence of any real start to the wet season this year has seen some adjustment start to emerge on meatworks grid prices, after season-opening rates earlier that were basically unchanged from late last year.

Grids for southeast Queensland slaughter have come under some pressure over the past week, with one exporter dropping rates 5-10c/kg across all lines, and another lowering cow money 5c on the previous week, due to adequate supply.

SEQ quotes on Tuesday were in a fairly wide range from 315-335c/kg for four-tooth grassfed ox and 290-305c for best cows. Best EU money seen was 355c, and MSA steer topping at 350c, but as low as 335c. Grainfed 100-day cattle have also shown an easing trend, down to 355c/kg in one grid example.

Central Queensland plants are around 10c/kg behind that, in general terms, while grids in southern states, currently in the thick of their seasonal turnoff, are anything from 15c to 30c/kg behind SEQ rates.

Meat trading terms into most export markets are not helping with price-setting.

Exporters yesterday reported inquiry out of Japan last week as ‘just sick’, in the face of mounting speculation that the relaxation on US imports for beef older than 20 months of age might be about to occur.

A common view was that the transition in freer US access into Japan had to be completed, clearing uncertainty, before any real substance would return to the Japanese export market.

Similarly, grinding meat prices into the US have started off the year lower than where they left off in December, reported last week at A$4.14c/kg.

MLA projections set for correction

The rapid and widespread onset of dry weather across Eastern Australia will inevitably have an impact on trends when Meat & Livestock Australia releases its 2013 cattle industry projections on Thursday.

From a processing perspective, the biggest impact if the season remains below-par is likely to be seen in a reduction in medium-term forecasts for herd rebuilding, potentially lower average carcase weights, and supply-side pressure on slaughter numbers during some stages of the year.

If conditions stay dry, females are again likely to occupy a larger proportion of the kill, after two years where cows and heifers have been kept back for breeding purposes.

This is well-illustrated in some NLRS slaughter stats, which show that for the 30-month period from January 2010 to June 2012, a total of about 8 million female cattle were slaughtered. For the previous 30-month cycle beginning January 2007 (before the onset of the sequence of wet years), female slaughter numbers were about 9.3 million head.

The difference of about 1.3 million head has had a dramatic impact on the rate of herd rebuilding.

Subject to normal seasons, MLA’s most recent mid-year projections released last July forecast the national cattle herd to reach 30.5 million head in 2013, a rise of 900,000 head from a year earlier (29.6m). Growth was then forecast to continue, albeit at a slower rate, out to 2015, when the herd was forecast to reach 31.5m.

It seems likely, at least, that those herd growth forecasts will be adjusted downward on Thursday, following the disappointing summer season that has unfolded so far this year.

• Beef Central will provide an early update on the results from the MLA Projections report on Thursday morning’s email alert to subscribers (click here to access the "Stay up to date" panel to receive your free daily email update), and more comprehensive reports on Friday.