Weekly kill: Numbers lift 1pc, as southern cycle grows

Jon Condon, 20/11/2012


Southern-state beef kills continued to gain seasonal turnoff momentum last week, while Queensland dropped three percent compared with a week earlier in the latest slaughter report issued by the National Livestock Reporting Service.

The weekly eastern states kill to Friday reached 140,868, up about 1pc on a week earlier, driven mostly by substantially larger kills in Victoria and Tasmania.

The NSW kill rose 1pc to reach 34,179 head, while Victoria lifted a hefty 12pc to post a tally of 20,764. Also greatly improved was Tasmania, up 19pc to 4061 head, while South Australia was unchanged at 8273 head.

Queensland was the outlier, slipping 3pc to 73,591 head, for reasons Beef Central’s processor contracts found difficult to explain.

Representing a decline of around 2000 head on the week previous, the most plausible explanation for Queensland’s slight softening trend may be as simple as a breakdown or two on the chain at a couple of sizeable plants, which can easily translate into a number like this.

Alternatively, it may simply be that processor margins currently are just too narrow, to justify chasing more cattle. Certainly, last weekend’s rain came too late to affect Queensland kills late in the week.  

Processor margins at current southeast Queensland slaughter cattle price levels (four-tooth ox around 340c/kg and cow 240-260kg around 300c) are seeing processors marginally in the black, reliable contacts suggested yesterday, but very flat demand being reported on the domestic market (more on that tomorrow) could easily deliver a slide back into the red for southern Queensland processors over the next few weeks.

In the grainfed segment, 100-day margins are also currently in profit (a little) based on forward purchase steer price four months ago in the 375c-385c range.

The increasing seasonal flow of slaughter cattle in southern states was reflected in a widespread 5c/kg decline in direct consignment grid quotes across the region last week.  

In contrast southern Queensland grid prices offered by major processors remained unchanged again last week, with the exception of a few isolated 5c rises in MSA yearlings, suggesting the supply/demand position is still pretty much in equilibrium.

Some see little likelihood of change before the approaching end of the Queensland processing season, in mid-December – barring significant rain disruptions to cattle supply.

Adequate to solid flows of direct consignment cattle are still seeing some southern Qld processors elect to use saleyards only to top-up on slaughter stock supply.

Last weekend’s good falls across of 25-75mm across large areas of southern Queensland were not enough to disrupt cattle supply on Monday, large processors said. However some physical markets early this week might see a slight impact in numbers, sources suggest, and the weather will brighten outlook for another solid start to summer season.

Is it too much to hope for for a third-straight strong summer rainfall pattern?

Some Queensland plants have started to nominate end of season closure dates for December, barring rain interruptions. Nippon Oakey will conduct its last kill for the year on Tuesday, December 18, last boning shift Wednesday December 19, and load-out December 20. Oakey plans to re-open January 7, 2013. More details as they come to hand.


Export meat outlook:

Imported beef prices in the US were generally firm this week on limited supply availability from Australia and higher asking prices from overseas packers, analysts reported on Friday.

End-users continue to bid on out-front deliveries, but asking prices were often well above what they were willing to pay, Steiner Consulting said in its weekly report.

Demand and trading was somewhat better for product that will deliver in late December and early January. Some end-users were looking to fill the gap that normally develops as US cow barns close, and supplies from Australia/NZ are more limited over the period due to seasonal closures.

Asking prices for product delivering further out are higher than what was quoted in Steiner’s weekly survey. New Zealand offerings have improved some but market participants continued to point out that they were not seeing as much product out of NZ as they expected.

This is not for lack of slaughter, which has picked up as it seasonally does at this time of year, Steiner said.

“Naturally with lean beef prices hovering well over $2.10/lb for imported beef, market participants continue to wonder about demand for lean beef. But the role of higher prices is precisely that, to force end-users to move up the demand curve in order to use less volume. Demand does not change, what changes is the schedule of supply-price relationships for a given demand level.”

Despite a net increase in the availability of imported beef in the US market, prices for imported lean grinding beef in the US market are now well above year-ago levels.

Last year, imported lean grinding beef prices in mid-November were hovering around 203-204 CIF compared to around 210-212 CIF currently (US East Coast).

This represented a 3.5-4pc premium to year-ago levels, despite a net increase of about 70pc in the volume of manufacturing grade beef shipments in October and an expected 10pc increase in shipments in November.


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