Beef kills in most Eastern States marked-time last week, but NSW was the odd man out, easing 12 percent as a result of seasonal closures at several large processing sites.
While paddock and road conditions in most areas have now dried out substantially after the June-July wet weather sequence, weekly rates of kill are showing little sign of rising at present, as a persistently high A$ tempers meatworks cattle buyer enthusiasm.
The A$ continues to exert a strong influence over export meat trading patterns Since its recent low-point of US96.6c recorded back on June 4, the A$ has now risen 8pc to sit in the mid 104s (USc) for most of the past week.
The big drop in kills in NSW last week, to 23,647 head, was due in part to the Teys Wagga facility closure for a fortnight for plant upgrade and maintenance reasons. On top of the loss of Wagga’s 1300-a-day throughput, Nippon’s Wingham plant is shut for seasonal cattle access reasons and annual maintenance. Throsby’s at Singleton is also closed for a week or two, while cattle numbers are tight.
Last week’s combined Eastern States kill reported by the National Livestock Reporting Service reached 123,226 head, a 1.3pc decline on a week earlier.
In Victoria, kills last week eased marginally to 17,411 head, down 1pc; South Australia was unchanged at 7327 head; and Tasmania lifted 14pc to 3657 head.
Queensland’s contribution towards the eastern states tally reached 71,184 head, a 2pc rise on the previous week, driven by some bigger cattle flows. Most Queensland plants had a clear run at slaughter cattle, with the exception of JBS Dinmore, which lost further half-days due to ongoing industrial action.
A number of southern Queensland plants will skip a day later this month due to Brisbane (or local) show holidays, and another killing day will be lost in late September at many plants for the Queen’s Jubilee celebration.
One of the trends noted by Queensland processors this week was the decline in the number of females being presented – last week representing barely 40pc of the state’s kill. This was considerably down on June/July female throughput, as the first muster rounds came to a close across more extensive northern and western cattle areas.
Reflective of the tough trading conditions in export markets, many Southern Queensland grids have eased a further 5c/kg compared with this time last week. Teys grids were adjusted downwards again yesterday.
Public quotes provided to Beef Central yesterday by larger processors were around 325c/kg on four-tooth grassfed ox, 330c/kg on milk and two-tooth ox, and 300c/kg for best cow. EU grassfed steer were around 365c/kg, and 100-day ox the same. MSA grassfed steer were quoted to a top of 355c.
One of the headwind factors at present in export markets is the considerable appreciation of the Brazilian currency (the Real) over the past few months against the US$. This has reinvigorated Brazil’s export performance, and local processors are again killing bigger numbers as the export competitive position improves.
Markets like Russia and the Middle East, particularly, appear to be taking bigger quantities of Brazilian meat again, at Australia’s expense, processors say.
Imported grinding beef prices in the US were virtually at a standstill last week as demand for spot product remained limited as market participants showed signs of wariness of US domestic lean beef prices in September and October.
Imported beef trade remained difficult at best, analyst, Steiner Consulting said. New Zealand slaughter would remain low into September, leaving Australia as the primary supplier of lean grinding beef to the US for the next two months.
As for Australian offers last week, market participants indicated the prices remained firm due to a number of factors: cattle supplies remained somewhat limited as packers in Australia try to reconcile the impact of a strong A$ and lacklustre world beef demand with more limited cattle offers.
Weekly slaughter in the first three weeks of July averaged 121,000 per week compared to 126,000 in June and 129,000 in May. Slaughter is running about 5pc lower than the five-year average.
The value of the A$ was making it difficult for grinding beef exporters to operate in the US market, especially given the slide in prices offered for imported beef. On an FOB basis, the price of imported 90CL Australian beef was the same last week as it was back in late May and early June.
“But that steady value is illusory given the slide in the value of the US dollar,” Steiner said.
Also negative for trade is the fact that it now costs more to bring Australian product to the US, given the increase in the regulatory burden for e.coli testing, and the higher risk that product may be rejected.
Australian shipments to the US in July reached 17,104t, 9pc higher than a year ago, but 13pc lower than the five-year average. The problem for Australian packers is that other markets remain soft.
While shipments to Japan in July jumped 33pc, exports to Korea were off 17pc while exports to Russia were down 40pc from a year ago.