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Weekly kill: Concerns over slaughter figures sees NLRS report grind to a stop

by Jon Condon, 04 October 2017
6

CONCERNS over the accuracy of weekly kill figures reported through the NLRS Eastern States slaughter report have seen the information service grind to a halt this week, as one of the nation’s largest processors refuses to supply data until it can be assured that the figures are accurate.

Beef Central first raised questions about the accuracy of recent NLRS kill data, supplied voluntarily by most processors, in last week’s report.

This week, the issue has escalated, with a major multi-site beef processor refusing to supply its kill data yesterday for kills performed during the previous seven days.

It makes a farce of this morning’s weekly slaughter report issued by NLRS (delayed a day due to Monday’s public holiday in most states) with effectively half the national kill (Queensland’s) missing, and no figure offered at all for a five-state seven-day tally. Only individual state results for NSW, Victoria, SA and Tasmania are published in this morning’s report.

The problem in no way reflects badly on MLA/NLRS’s performance, but accusations have been levelled at other processors, for supplying NLRS with what are described as ‘inflated’ weekly kill figures. Exactly what the motivation would be for doing so, remains a mystery at this stage. But there is a belief that if it is happening, it is harming Australian exporters’ ability to effectively negotiate price on export meat.

Essentially, what critics are saying is that export customers viewing the inflated figures falsely believe there is more meat in the pipeline in Australia than is actually the case, and consequently are negotiating harder than what they otherwise would on price.

Critics have questioned recent weekly kill figures for Queensland, citing known plant closures and shift reductions as clear evidence that published figures were over-inflated. Just last week, NLRS is known to have twice revised downwards the Queensland numbers published in its weekly kill report, after complaints. The initial figure of about 72,000 was firstly adjusted to 70,255 and again a second time to just over 66,000.

“We believe the true number for Queensland last week was closer to 55,000 head,” a processor told Beef Central.

Critics used Department of Agriculture month-on-month beef export figures to further illustrate their point. DA figures show exports to all markets in August at 98,710 tonnes, falling 10,800t or 10.9pc the following month to 87,900t in September. That substantial decline is certainly not supported by NLRS kill figures over the same period.

Processors rejected any suggestion that that 10,800t of extra beef had simply diverted into the domestic market in September, as the domestic channel was ‘already full.’

“The DA export figures are determined from printed Health Certificates, so we believe the kill figures being reported by NLRS are incorrect and overstated,” a processor contact said.

“This is having an impact on market sentiment and leading customers of Australian beef to a false sense of security. As a seller of beef into a very competitive international market, I would prefer no publicly available data to incorrect data – to me that is much worse,” he told Beef Central.

“We (processors) will go to the MLA projections activity in December, and all their data is calculated around these weekly kill figures. Is it any wonder we have no accurate numbers and no faith in their forward projections?” he said.

“Our sales team is telling Japanese and Korean customers that kills are back, so they had better make purchases or miss out. Then the inaccurate number gets published, and it says kills have actually gone up. Is it any wonder processors can’t lift revenue when customers think we are lying to them in every phone call.”

Kills appear to retreat

So given what’s happened this week, what can we learn from what’s left of last week’s NLRS Eastern States kill report?

Firstly, all southern states were in retreat, with NSW back 10pc to about 29,600 head; Victoria back 15pc to 18,100 head; South Australia down 8pc to 7366 head, and Tasmania minus 6pc to 4128 head.

This currently week will also produce a substantial kill deficit in all states, with Monday’s public holiday having a big dampening effect on rates of throughput.

Rain will have considerable impact

Speaking of ‘dampening effects’, the welcome weekend rain across large parts of Central and southern Queensland is also having an impact on supply.

Rain fell in a fairly wide band (see this morning’s separate weekly rainfall wrap) in the eastern third of Queensland from Saturday, with a lot of country receiving 50-75mm, and some parts much more than that. Falls were much light across the NSW border, with 25mm or less reported in some northern areas.

Several Queensland processors reported cancellations of bookings this week, especially from blacksoil country, until the paddocks dry out a little. No plans for shift reduction were reported, but putting together a kill schedule remains a ‘day by day’ proposition at present, plant livestock managers say.

The big story now for Queensland producers will be follow-up rain: if they get it; when; and how much. Buffel will respond quickly, but a return to scorching hot days like those experienced a week or two ago will burn off any pick in no-time.

Queensland grids have so far remained unchanged since the rain, with grassfed four-tooth ox today quoted at 490c/kg, and heavy cows 430c/kg top cell. Central and Northern Queensland plants remain on the same money as their southern cousins – a sure sign that numbers further north are drawing thin. A larger northern NSW export beef processor has grid offers for kills week commencing 9 October of 450c for grassfed heavy steer, no HGP; and 400c for full-mouth cow.

Big impact on EYCI

The result of the rain was an immediate and dramatic impact on the Eastern Young Cattle Indicator, however, which yesterday halted its relentless downwards spiral to post a dramatic 9.75c/kg rally, to finish at 517.25c (see home page graph).

Prior to the weekend, the EYCI was on course to crash through the 500c/kg barrier for the first time since 2015.

Roma store sale yesterday (see this morning’s separate report) reflected the clear impact of the rain, with just 2800 head yarded and prices for heifers jumping 10-15c. Restocker C2 yearling steers weighing 200-280kg were 23¢ higher, averaging 342.9¢ and ranging from 238¢ to 388¢, while their heifer counterparts sold for an average of 301.4¢, up 43¢/kg lwt. Heavier types to also lifted, with C3 yearling steers weighing 330-400kg selling to restockers for an average of 326.1¢, up 44¢/kg

Despite widespread rain across the southern half of the state over the weekend, and more light showers forecast in coming days for the south-east, Queensland cattle over-the-hook indicators remained steady this week for most descriptions. Yearlings, grown steers, heifers and cows were firm on week-ago levels, with now change to grids. Meanwhile, bulls and MSA categories eased – with the margins narrowing between MSA and non-MSA types.

The lack of movement in processor grids indicates the reasonable supply booked in advance, on the back of the deteriorating conditions across the state.

If the positive October outlook comes to fruition, however, this may reapply upward pressure on the market, as supply tightens and restockers re-enter the market.

 

 



Reader's Comments


Comment
  • Sam Staines October 4, 2017

    Questions regarding NLRS don’t reflect badly on MLA/NLRS? Pull the other leg.

    Thanks for your comment, Sam. Beef Central’s inquiries confirm that NLRS personnel make contact each week with individual processors, to collate the eastern states slaughter report data. The system is voluntary, and what processors tell them is up to them. NLRS staff have no way to verify whether the figures are right or not. Editor

  • Eion John McAllister October 5, 2017

    What about looking at the transfer information that goes to the PIC of the processors? Surely the super data base can give out that info to them with an interrogation. It might not give a breakdown in classes of animals but every animal will have a NLIS device and it has to be read and reported as a movement. The data is there to check the number of animals which are going through their gate and it is pretty sure that they don’t go back out again on their own 4 legs. A simple comparison between the PIC activity and the weekly figures supplied would go a very long way towards identifying who might be engaged in elastic data supply to the NLRS. If they haven’t been able to do this from their own info base, from their own system and probably their own building, saying they rely on the integrity of the processors voluntary info is a bit lame in my book.

  • Lee Mc Nicholl October 5, 2017

    It sounds as though processors can “voluntarily lie” . How about some mandatory reporting with severe penalties? Don’t wait for the Cattle Council to come up with such a simple solution. They have been brain dead for too long. As I recall, CCA has opposed any form of mandatory market reporting in recent Senate reviews of the cattle industry. No wonder MLA can’t do the job for producers when they are “controlled” by a dysfunctional, unrepresentative CCA. CCA must be disbanded and replaced by a body that democratically represents all compulsory levy payers.
    Hello Barnaby are you listening? Please enact the Senate report before the High Court rules on your eligibility. It would be your most important legacy.

    Thanks for your comment, Lethal. We’ll apply some more scrutiny to this issue (mandatory versus voluntary reporting of kill numbers) in an upcoming story. Editor.

  • Dylan Duncan October 5, 2017

    I second eions comment above. How is this data not available to the MLA? Electronic tags are just that. Electronic. They don’t require a phonecall to be logged onto the system. Blame here must be shared as I feel it’s an idadequate system to begin with. The best operators cannot do their job if the system is fundamentally floored

  • Ian McCamley October 5, 2017

    NLRS could add a disclaimer to their data something like, ‘this data is unverified and may contain complete rubbish!’.
    In all seriousness though, why is it necessary make our weekly kill data public to our global beef buyers and competitors?

    Good question, Ian. Let’s ask it, and we’ll report back tomorrow. It reminds us of the days when the feedlot industry would report on cattle numbers on feed, only a week or so after the start of the new quarter. Whenever the figure was higher than what people expected, Japanese and Korean grainfed customers would clobber their suppliers on the Australian export meat trade desks with the numbers. Funny, it never happened in reverse when COF was lower than what the industry expected! Lotfeeders and analysts finally wised-up, and held back a month or so before releasing the quarterly stats, to take the sting out of it. But plenty of people still ask the question: Why release the data at all? Editor

  • David Hill October 5, 2017

    Yes Lethal, what a gem you are, I remember the performance you put on at the MLA AGM when it was held in Rockhampton. Congratulations Editor, for thanking someone for the constructive critism, calling other producers brain dead, let’s hope the restructure happens in a hurry, so all these people, with all the answers can turn up to the negotiating table and get the rest of industry to give them exactly what they want, happy days, this brain dead is looking forward to staying at home and letting the pros get on with it.

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