AFTER two years of drought-fuelled herd liquidation which pushed the national beef herd to 20-year lows, some small, but encouraging green shoots of optimism are emerging in the processing sector over future cattle supply outlook.
From Monday next week, JBS Australia will schedule extra shifts at the company’s flagship Dinmore beef plant near Ipswich – the largest beef processing plant in Australia.
It’s a significant early sign of optimism that good calvings experienced across large parts of eastern Australia over the last two years since the drought event are now just starting to deliver.
Dinmore from next week will carry an extra shift, spread across a five-day weekly configuration: Monday to Thursday will each carry two slaughter and boning shifts, and Friday a single shift.
Provided cattle numbers are there, it gives a potential weekly kill through Dinmore of 15,300 head. That’s easily the biggest weekly tally since the plant retracted to a four-day roster due to sustained herd liquidation, way back in July, 2016.
Why would a large export shed like Dinmore push for a ninth weekly shift, when cattle supply is still clearly hampered by the drought events of 2015-16? The answer lies in plant efficiency. Large, export meat processing sheds only start to make financial sense when they are operating as close as possibly to capacity.
It still has a long way to go, though. Prior to the national herd collapse, Dinmore was pushing through 12 shifts a week, Monday to Saturday, each accounting for around 1700 head – close to 20,000 head per week. Go back to 2009, and plant throughput was even more extreme – running for a long period at seven-days-a-week.
Elsewhere, there’s signs of some other plants slowly adding a few more cattle to existing shifts, or scheduling additional days. As is often the case these days, though, labour resourcing is one of the deterrents to rebuilding processing numbers. Several plants have told Beef Central this week they would have liked to expand from current minimum daily kill numbers this year – but sourcing labour to do it had been an issue.
Slaughter supply looking comfortable
Most large processors spoken to this week indicated that supply numbers were building as April progresses.
Queensland processors said there was a strong early inflow of slaughter cattle off the Barkly Tableland, where the lack of a wet season in some parts this past summer had forced early movements. More on that in a coming report.
In the south, dry conditions across large parts of Victoria and southern NSW had kept slaughter cattle flowing. First autumn rains will inevitably see that tighten up, however.
“It’s unusual for this time of year, but both the south and north are running at present,” one processor said.
In Queensland, any of the cattle that have come through the autumn on the back of the early March rain will not be ready for turnoff until May at least, meaning most of the cattle currently heading for slaughter had benefited from earlier storms, Beef Central was told.
“We’re seeing enough cattle coming at us presently to suggest we are going to get through the next couple of months – but both either side of June 30 could see some tight supply positions. But the latter part of the year, at this stage at least, is shaping up OK,” a large multi-site processor said.
Grids show little change
While a few Queensland grids have adjusted upwards by 5c/kg in the past week, that was more to match nearby competing offers, rather than any fundamental shift in market sentiment.
In southern Queensland, cow grids this week are offering 440-445c/kg on heavy cows, and 500-505c on four-tooth grassfed ox.
Queensland grids currently show some very large contrasts across the state, with northern grids currently 30-45c/kg behind those in the southeast corner.
For long periods last year, grids were basically the same from one end of Queensland to the other, with processors copping a freight bill to keep southern plants occupied.
That’s changed somewhat this year. Grids this week suggest a rate of 400c/kg on best cows at Townsville (which opened a week ago after a weather-delayed start to the 2018 season), compared with 445c at southeast Queensland export plants, and 430-435c in Central Queensland.
Across the border, a large northern NSW export processor has offers for kills this week of 460c/kg on four tooth ox, and 430c/kg on cows.
Kills show rising trend
The Easter-Monday shorted eastern states weekly kill rose 2pc last week, reaching 111,152 head.
Clearer pictures of throughput will emerge this week, with a return to full weekly processing activity, but Queensland will show an impact from the normal annual closure of the Kilcoy Pastoral Co plant, accounting for around 1200 grainfeds a day, currently shut for three weeks for maintenance.
Queensland last week killed 53,555 head, up 1pc from the previous four-day week, while NSW at just below 28,000 head was +3pc. In Victoria, numbers reached 21,303 head, up 2pc; in South Australia, 4400 head were processed (+12pc), while in Tasmania, the kill of 3900 was much the same as the week before.