Processing

Weekly kill: Rain event fails to impact high rates of slaughter

Jon Condon, 01/04/2014

 

LAST week’s rain event across Eastern Australia appears to have come too late to have had any real impact on slaughter rates, with the seven-day kill to Friday remaining stubbornly close to 168,000 head.

That’s less than 1pc down on the previous week.

The consensus among processor livestock managers seems to be that despite good falls ranging up to 100mm across large tracts of cattle country across Eastern Australia, the best of the rain did not arrive until Thursday, and perhaps was not heavy enough to cause widespread road closures or paddock access problems to stem kills.

More than one processor also volunteered the suggestion that there may have been some ‘topping-up’ going on, with the abundance of feedlot cattle available – mostly easily accessible, in road access terms – being used to plug any holes in Friday’s kill rosters.

Queensland’s kill last week, reported by the National Livestock Reporting Service, reached 84,250 head, back 1pc on the week previous. Disregard the 33pc decline in year-on-year comparisons, however, because Easter fell earlier in 2013.

Southern states kills last week were little changed, with NSW all square at 38,493 head; Victoria +1pc at 31,178 head; Tasmania +3pc at 5077 head; and South Australia -6pc at 8857 head. All were back 34-69pc on year-earlier kills, because of the Easter factor.  

Reports suggest the south has been more affected by last week’s rain than the north, with several southern plants looking at cancelling Saturday’s kill, as numbers tighten. Desire to get on a tractor following the moisture profile boost may be partly to blame, in those areas where cropping is an option.

In Queensland, however, the impact on kills and slaughter cattle flows has been negligible, at best, up to now.

The succession of short killing weeks starting Easter Friday, April 18, may also push more cattle forward in advance of those disrupted weeks. Some plants could lose up to five shifts over a two-week cycle, due to Easter and Anzac day holidays, and the dropping of Saturday shifts interspersed over that period.

Most processors say they already have enough cattle booked forward, with a price, to cover them until after Easter, and in some cases through to early May. But what happens after that is open to some speculation.

Some anticipate slaughter numbers might start to tighten a little from May, while others feel heavy supply will continue until later into the second half.

“This has been great rain, but it doesn’t rain grass,” one large processor contact said yesterday.

“It’s been tremendous, beautiful rain, but a hundred mills does not make a season. Another four weeks without follow-up and some people will be in trouble again, especially with shorter days and cooler nights making growth minimal.”

At best, it might take some pressure off, and reduce the long waiting period for kill slots, previously up to two months in advance.  

The short grass-growing season due to the late seasonal break and the likely onset of cooler weather within the next month will also contribute to that. More on that subject tomorrow.

Additionally, for anybody with feed, the onset of frosts is likely to help sustain high turnoff for a little longer yet. Another factor will be the commencement of traditional turnoff period for northern cattle heading into cooler months.

“I’d have thought May and June will still be flat-out,” one large export processor contact said.

“I’d be very surprised to see Queensland weekly kills fall below 80,000 at least out to July, apart from holiday weeks,” he said.

At best, the normal August seasonal cattle deficit might be brought forward a little this year, he suggested.

 

Saleyards see impact

As discussed in this weather report on Beef Central on Friday, the rain event had an immediate and substantial impact on saleyards numbers and prices, which has been carried over into physical sales early this week.

Typical was Gunnedah sale this morning, where market trends through all classes of young cattle were dearer. Medium weight yearling steers to feed averaged 15c/kg higher than the previous week, while yearling heifers to restock and feed were up to 19c/kg dearer. The greatest improvement in the market was for the plain conditioned cows, with trends 25c to 35c/kg dearer.

At Wodonga sale this morning, yearling trade steers gained 10c/kg, while heavy bullocks over 600kg sold 15c dearer to average 193c/kg.

Forbes sale yesterday showed a similar response, with Yearling steers to slaughter lifting 8-10c, while mediumweight heifers to processors jumped 15c, with quality a contributing factor. Heavy steers and bullocks were 8c better and cows + 7-10c/kg.

 

Spectacular rise in EYCI, but no grid movement

The EYCI has risen spectacularly since the rain event last week, pushing to 330.5c/kg yesterday – its highest level in 12 months, and a 46c/kg jump since the recent low point in late January. That’s a rise of 16pc in eight weeks.

Southeast Queensland grid prices quoted to Beef Central this morning remain unchanged to figures offered prior to the rain. Competitive quotes seen this morning were 325-330c for four-tooth grassfed ox, milk and two-tooth, 330-335c, best cow 295-300c, and MSA grass to 360-365c.

EU grassfed steer price is still around 385c-390c in southeast Queensland plants, with the EU quota year open through to the end of May, which sometimes can spark a late rush to fill quota entitlement.

The industry generally is managing the EU quota year a lot better now than it did in the past, however, when there could often be a big rush (and higher price) towards the end of the quota year, followed by a lull afterwards, as the new shipping year commenced.

While the grassfed quota has not filled for the past couple of years, sometimes by now the quota would be filled.

Another category worth noting is Certified organic, with one large SEQ processor last week shifting its grid offer to 520c/kg.

NTCA conference speaker Rob Boshammer commented on organic food production during his address at last week’s conference. In a reference to the productivity sacrifice, he suggested that while Organic was obviously a strong market, the global beef industry would only ever feed three quarters of the world’s current population, if it decided to go down the organic path.

“That means one in four of us is going to have to give up the ghost. Put your hand up if you want to volunteer,” he said.

 

 

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