Weekly kill: Numbers ease, but trend is only temporary

Jon Condon, 04/02/2014


Eastern States beef kills took a slight breather last week as the Monday Australia Day holiday had its usual impact on processing throughput.

But that correction is only temporary. Most large Eastern States processors with the flexibility to schedule Saturday kills are indicating they will do so for the foreseeable future – at least until there is some sign of seasonal relief – to cope with the heavy backlog of drought-impacted cattle waiting for a spot on a kill roster.

That almost guarantees that Eastern Australia’s weekly kills will push back up towards the 160,000 threshold again this week, with a clean run now through to Easter in mid-April.

One of the factors that will inevitably start to take the edge off kills this year, compared with last, is the flow of lighter slaughter-weight cattle now heading into live export.

With Indonesia likely to take around 600,000 northern cattle this year, and other livex markets anywhere from 200,000 to 300,000 head, export processing sheds in northern, central and even southern Queensland will inevitably feel the effects as the year progresses.

The additional competitive pressure is being clearly reflected in current grid pricing between southern Queensland and Central/Northern Queensland.

It’s not unusual for northern and southern Queensland grids to be more closely aligned at this time of year, but that often still means a 10c/kg advantage to plants further south. Grids at present, however, are pretty much identical from one end of the state to the other, due to current live export activity.

The other factor may be slightly more optimism about the weather in northern and western Queensland, where cyclone Dylan and the tropical low in the Gulf of Carpentaria are giving rise to a little more optimism than areas further south. This may be reflected in a little more reservation to market stock at present, across the region.

The other benefit that the heavier flows of live export cattle will have on the broader Eastern States cattle market this yeaqr will be in negating the risk of big inflows of northern cattle into southern selling centres, as was seen last year through Roma and other large store selling depots.      

Last week’s Eastern States slaughter report prepared by NLRS produced a tally of 140,177 head, down 13pc from the previous week due to the Public Holiday on Monday. To put the trend in some context, however, the previous week was an all-time record kill for January (161,712 head).

All the larger processing states recorded declines last week, with Queensland back 14pc to 69,077 head, and NSW dropping 13pc to 33,666 head. Victoria was much the same, back 16pc to 24,445 head, while Tasmania was down 18pc to 3965 head.

South Australia was the only outlier, being +2pc at 9024 head for the week.

Comparisons with the start of last year warrant some scrutiny. While 2013 was an all-time record for beef slaughter and export volume, the year started off fairly typically, before gaining momentum heading into mid-year as the drought effect worsened.

This year, with no sign of weather relief on top of what was already a sorry year in 2013, the rate of kill has exploded from the outset.

The past four full-weeks of January this year accounted for almost 552,000 slaughter cattle, or 138,000 head per week. The same first four weeks of 2013 saw a tally of 449,000 head, or 112,000 head per week.

It means the Eastern States have already killed an additional 103,000 head of cattle this year, compared with last, and the year is only just a month old.        

Large Queensland processors are now taking solid space bookings well into March, with February now heavily covered – either with priced cattle or stock simply booked for a slot. One large southern Queensland export shed is booked solid out to February 23 on price, offering only slots after that date.

Forward grainfed contracts are still evident in some considerable numbers, which are further restricting available kill space on grassfed cattle at some Queensland plants.

One large integrated processor/lotfeeder/exporter told Beef Central this week it currently has about 100,000 grainfed cattle on its books, either in company-run yards or being custom-fed – about double what it normally carries.


Grid prices remain unchanged

Queensland meatworks grid prices have been relatively stable since the 2014 season opened, with one 10c/kg downward adjustment two or three weeks ago for some processors, while another has left offers effectively unchanged from the end of 2013.

Typical public grid offers for SEQ slaughter are presently around 330-345c/kg for 0-2 tooth heavy grassfed steer, 320-340c/kg for 4-tooth, and best cows anywhere from 285c-310c/kg. In grainfeds, we found 100-day YG steer at 365c, and 70-day MSA steer at 350c, for boning groups 1-8.

A large northern NSW single-site processor has dropped prices 10c/kg in late January, having MSA grassfed steer, HGP-free at 335c/kg for boning groups 1-6, 5c more for Angus; and best full-mouth cows 280c.


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