Weekly kill: Record numbers have to ease at some point, but when?

Beef Central, 04/03/2014

Whatever impact last month’s extremely patchy, and generally disappointing rain event had on slaughter cattle supply dynamics is now long gone, with Australia’s Eastern States notching up yet another all-time record weekly kill last week.

The five states reported under the NLRS report – Qld, NSW, Vic, SA and Tasmania – posted a tally of 168,757 head for the seven days ended Friday. That’s more than 1500 head, or almost or 1pc higher than the previous kill record set only the week prior.

Given the succession of record-breaking kills seen recently, it begs the question: just where is the physical limit for the processing sector to slaughter cattle during times of crisis like this, and when is the cycle likely to turn?

The physical kill limit must be close, with reports of weekend and double-shifts common in the three largest eastern states since January, in those plants that can accommodate it.

In a breakdown of each state’s kill last week:

  • Queensland reported a throughput of 83,415 head, down 1pc on the week previous, but still 14pc up on this time last year
  • The NSW kill reached 39,910 head, on par with the week previous, but +17pc on the same week a year ago
  • Victoria produced another huge surge, reaching what appears to be an all-time weekly record kill 31,523 head, up 9pc on the previous week and +34pc on year-ago throughput.
  • South Australia was back 2pc on the previous week to 9259 head, while Tasmania was back 8pc to 4650 head.

Given what’s happened over the past 12 months, Beef Central has set about asking key processing sector livestock staff how long such high kills can possibly last.

Most were on the same page, in terms of outlook, working on two possible scenarios:

  • Some semblance of autumn seasonal break across eastern Australia before the end of March. in time for some late-season grass growth before winter, and
  • A continuation of current dry conditions for the time being, with a more typical spring break occurring.

If there is no widespread relief rain before winter, the consensus seems to be that processors will continue to kill close to capacity through to the end of April, where the short-kill Easter weeks have an impact. Rain by the end of March is likely to be the next decision-making point for some producers in their herd sell-down.

But slaughter numbers could start to thin-out significantly through May and June, in both southern and northern Australia.

August is normally a very tight month for slaughter cattle supply as winter draws to a close, and that will be the case this year as well – perhaps brought forward a little into July, or even June, because of the way the season has unfolded.  

If there is some decent widespread rain in coming weeks before temperatures start to fall, that drop-off in slaughter will happen a lot sooner, and may last into Spring, processors say.

Notwithstanding that, a fair percentage of Queensland and NSW has now had some beneficial rain, and the short feed that will follow in coming weeks will be full of protein. With compensatory gain to be had, cattle in those areas will ‘do’ pretty well, and this could deliver a flow of some handy cattle during the spring months.

In other areas, oats may be a short-term feed option. Places like Tamworth/Gunnedah that have now had 75mm or better will be looking at an oats planting in some areas, providing a feed resource through winter and into spring.

Another processor was wary about such forecasts, however.

“In the absence of significant rain, cattle supply in these prolonged dry situations tends to hang on a lot longer than what a lot of people might expect – even after the massive kills we’ve seen over the past 12 months,” he said.

“If the south got a good break it might tighten things up pretty quickly, but it looks like the northern numbers will keep moving for some time yet, as we run into winter,” he said.

“Supplementary feed commodities are either exhausted, or too expensive to consider feeding cattle on over winter, which will prompt some producers to sell them down earlier, rather than trying to produce a heavier article in the spring.”

“But August traditionally sees a shortening in numbers, and I can’t see any reason why that won’t happen this year, also. Whether that lull starts earlier this year because of what’s happened, season wise, is hard to tell.”

This processor thought there would be plenty of supply pressure on until the back-end of winter, at least. “There’s still plenty of northern cattle and cow turnoff to happen, that will keep some momentum in numbers,” he said.

US monitors Australian weather patterns

An interesting point to note is just how closely the devastating weather conditions in Australia are being monitored overseas. One of Beef Central’s key contacts in the feedlot sector is currently in the US, completing a Harvard University general management course. On the way over, he stopped in to attend the recent US National Cattlemens’ Beef Association’s industry convention in San Antonio.

He told Beef said that an unusually long period of time was spent by a meteorologist conference speaker, discussing the prospects this year for El Nino, and specifically how this might affect Australian cattle production and consequent exports.

Grids largely unchanged

While meatworks grids in southern Queensland have remained basically unchanged for another week, there is clear evidence that feeder cattle prices have tightened up since recent rain, as some producers start to see some options ahead. In the south, Black feeders have gone to 200c in places in the past week, a good 20c better than where they were before the rain.

The same applies in the north, perhaps not as extreme.

Some SEQ processor grids showed further 10c/kg improvement in EU grassfed pricing this week, with most competitive quotes in the range from 390c-400c/kg. The reason is it’s getting close to the end of the EU quota shipping year (March 31), with

Australian exporters and their EU importer contacts keen to fill their quota entitlement.

Public grid offers for SEQ slaughter yesterday were around 330-340c/kg for 0-2 tooth heavy grassfed steer, 320-335c/kg for 4-tooth, and best cows anywhere from 285c-305c/kg. Lighter cows are obviously being priced more severely. In grainfeds, we found 100-day YG steer at 365c, and 70-day MSA steer at 350c, for boning groups 1-8.

Queensland processors spoken to yesterday indicated that they remain under heavy cattle supply pressure, with solid kill bookings, through to late March in some cases.

One company reported clear signs of weights slipping further in slaughter cattle. While its company-wide average carcase weight is close to 300kg, it saw a Saturday kill at one of its Queensland plants last week averaging 235kg, due to a big roster of older cows in light condition.

That trend, while perhaps not as extreme, is being seen across virtually every export plant in Queensland and northern NSW. MLA recently reported the national kill for 2013 as being back 10kg on the year previous, one of the largest year-on-year weight adjustments ever recorded.





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