Direct consignment quotes ex the large Southeast Queensland export processors are starting to show signs of a tightening in supply, with further rises evident in some grid offers in the past 36 hours.

The sweet-spot in heavy cow grids scrutinised by Beef Central this morning hit 300c, and 305c in places – that’s up about 15c/kg on three weeks earlier, and the best money we’ve seen since the week of January 15 this year. After that date, the big price declines started to emerge in line with the drought-driven supply pressure experienced over the past nine months.

Grassfed heavy ox money has also risen again this week, reaching 340-350c/kg in places this morning – again, the best money seen this calendar year, with the previous high-point back in January of 340c.

It’s not hard to figure out why.

Stronger international demand, impacted somewhat by the lower A$, is meeting a slowdown in supply of killable cattle, as the processing year draws to a close.

Another ‘sleeper’ that is inevitably creeping into processor livestock pricing is improving fifth quarter values. MLA reported September co-product value on heavy steers as up 11pc on this time last year, averaging $232 a head.

Hide prices was the biggest driver, being 20pc up on August value and 37pc higher than this time last year. Tallow was also worth 15pc more than it was a year earlier, while meat and bone meal was lower due to increased competition from the US.

Beef offals averaged $58/head in September, down 7pc on last year, underpinned by lower tongue prices, as competition from the US increases in Japan, and Indonesia fails to engage.

While last week’s NLRS Eastern States slaughter report was influenced heavily by the Monday Labor Day public holiday celebrated in NSW, Queensland and Tasmania, it’s hard not to factor in a little general decline in kill numbers into the outcome.

Several processors commented that they have now ‘eased-back’ off earlier high kill rosters, dropping overtime and weekend work which have pushed weekly kills this year to record highs.

Last week’s eastern states tally of 139,396 head is the lowest in 17 weeks, beaten only by a 136,000 head kill in mid-June, which was a national rather than partial holiday for Queen’s Birthday.

Worst hit last week, of course were the states where the Labor Day holiday was gazetted, including the largest slaughter states of Queensland and NSW, plus Tasmania.

Queensland’s kill was back 11pc to 68,573 head, which remains stubbornly 12pc above this time last year. The decline would have been larger, save for some large Central and North Queensland plants like Teys Lakes Creek and JBS Rockhampton and Townsville rostering a work-day shift last Monday to cater for drought cattle flows.

The NSW kill also fell 11pc last week, declining to 32,316 head, also still strongly positive on this time last year at +16pc.

From this point in the calendar last year, however, there was a general lift in processing momentum, compensating for a slow start to the year caused by producers holding back cattle after a memorable start to the year. All that now seems like a distant memory, as the drought impact continues to encroach on a broadening footprint across western and northern Queensland and western NSW.

Tasmania followed the same trend as the northern states last week, falling 5pc last week due to holiday pressures, recording a weekly kill of 3724 head.

Going against the trend were those states where the holiday is held at other times of year. Victoria was +3pc for the week, with a tally of 26,224 head, while South Australia was +5pc at 8559 head.

Las week’s total Eastern States kill was back 8pc on the week previous, which itself was down 3pc on the week before that, suggesting that the huge 150,000+ Eastern States weekly kills may now have passed.  

Northern export processors are now starting to consider closure dates for the 2013 season before their traditional Christmas/New year shutdown. Thursday, December 19 shaping up as a popular option for the last kill floor shift of the season, and Friday December 20 as the last boning room shift.

In the fortunate event of some widespread rain across major cattle areas before that date, closures would be likely to happen earlier, as cattle numbers would be likely to tighten dramatically, processor contacts said.