Weekly kill: Northern slaughter grids rise another 10c/kg, as supply grip tightens

Jon Condon, 16/06/2020

DIRECT consignment offers from some Queensland export processors rose another 10c/kg yesterday as the tight slaughter cattle supply outlook across eastern Australia continues to intensify.

Grids this week show four-tooth steers from competitive processors in southern Queensland from 620-630c depending on location (some of the higher offers are for HGP-free cattle only), and best heavy cows 550-555c.

Central Queensland offers were typically 10c/kg behind those rates this morning.

Queensland processors remain under considerable competitive pressure from live exporters seeking heavy slaughter types, exiting out of Port Alma or Townsville.

Current offers for heavy boat cattle vary, depending on numbers, but one of the attractions is how wide the weights specs are – typically animals from 450kg to 700kg. This ‘ease of management’ makes it especially easy for potential suppliers to go down the live export route, on top of a no-discount offer around 340-350c/kg liveweight. A cost-to-process in Vietnam that has been calculated at $250 a head less than Australia’s means live exports has a big head start in the competition stakes against domestic processors.

No changes were evident in southern state grids this week, after some sharp rises seen the week before. Among publically disclosed grids, Naracoorte and Wagga are currently offering 610-615c on four-tooth grass steers, and heavy full-mouth cows 560c.

A large northern NSW export processor has current offers for kills week commencing 22 June of 540c/kg on heavy cows and 560c/kg on four-tooth grown steers, no HGP.

Over the hooks indictors published by NLRS this morning showed NSW grids last week trending 6c/kg higher on cows to 543c for cows +280kg, and four-tooth grown steers up 8c/kg to 595c. Victorian grids also trended sharply higher last week, with cows rising 8c/kg to 521c on best descriptions, and grown steers up 18c to 630c on four-tooth types.

Premium cattle lines continue to attract big bonuses across the industry, with no-HGP certified grassfed brand programs in Queensland this week offering anywhere from 675-730c/kg for July delivery on yearling MSA types. That’s equal to the highest money ever seen for such brand-program cattle in the northern state.

Tax time impact on supply

As the industry approaches end of financial year, slaughter cattle numbers on offer are likely to constrict further – if that is possible in the current production cycle.

Typically, numbers on offer to processors tends to decline in the run-in towards June 30 as tax considerations come into play, followed by a lift in numbers early in the new financial year.

This year however, that trend is likely to be less pronounced, processors told Beef Central this morning.

“That’s because numbers are already so tight, due to the drought impact,” one processor said. “And any ‘surge’ in supply that happens in July is likely to be only brief, and less intense than it normally is – the cattle just aren’t about,” he said.

Adding to this is a view that stock camps in the extensive cattle operations in the far north and west are already well ahead of normal seasonal cycles this year.

“Many have already finished their first round musters, meaning the cull cows that were being turned off earlier have now gone very quiet,” one large export processor said.

“With the COVID shutdown, many stations had their staff on hand – they were not drifting away to campdrafts, rodeos and races on the weekend – so they go stuck in and finished their first rounds particularly early this year,” one processor said. “Some have got more paddocks done by mid-June than they have ever seen before.”

“It means there will be a void now for a while in availability of large runs of northern and western cows, until the second round gets underway – and even that will be compromised by the earlier drought.”

More processors are looking at reduced shifts in coming months as access to slaughter cattle continues to decline in the back half of the year.

One large multi-site processor said his company had managed to maintain full weeks at its processing sites this week, but did not know how long that would last. Expect to see weekly shifts start to disappear; days dropped; and potentially, more week-long closures among beef plants, as competition for already expensive cattle gets too intense.

Flatness in meat trading in world markets is another factor, particularly as the US processing industry cranks up to full production in an effort to kill the huge back-log of fed cattle held over after earlier COVID-related plant closures. Extra weekend shifts are being widely discussed in the US processing industry this week, which would mean greater volumes of beef also pushed onto export markets like Japan and Korea, where Australia and the US compete head-to-head.

Saleyards trends

In saleyards slaughter cattle trading early this week, the big price advantage in southern cattle has now more or less disappeared, with comparable cattle worth a similar amount from Queensland to Victoria.

Barnawartha sale this morning contracted further to just 650 head, with grown steers and bullocks gaining 4-24c, making from 342c to 407c/kg. A good supply of heavy grown heifers were offered selling from 315c to 372c/kg.

Gunnedah yarded 1100 head this morning, with strong processor demand for heavy cattle seeing well-finished grown heifers sell to dearer trends. Processors also competed strongly in the cow market with trends as much as 26c/kg dearer on heavy weights.

This morning’s Naracoorte sale yarded just 656 head, producing a market firm to a few cents better in price. Grown steers and bullocks sold from 365c to 385c and grown heifers made from 310-322c/kg. Heavy cows sold from firm to 3c better, making from 262-306c, with the lighter selection returning from 238-263c.

Roma yarded only 3500 cattle this morning – well down from the 5000-7000 head yardings seen recently. See tomorrow’s full report.

Local rain across eastern parts of Queensland and NSW over the weekend of 25-50mm has put a handbrake on cattle work in some areas, and may stimulate a late wave of planting in those cultivation area that do not already have an oats or wheat crop in the ground.

Weekly kill

Last week’s slaughter numbers across eastern Australia were little changed from the week before, at 120,605 head. That comes despite the return to work of JBS Dinmore after a week’s closure earlier due to supply constraints.

As a result, Queensland’s kill last week lifted 16pc to 66,117 head, while most other states trended sharply down. NSW dropped 11pc to 27,201 head; Victoria fell 18pc to 19,976 head; and Tasmania fell 19pc to 4027 head.

Only South Australia lifted throughput, climbing 1pc to 3284 head – down 17pc on this time last year.




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