Big price correction evident in early meatworks grids

Jon Condon, 12/01/2016

IT’S early times, and quite a number of Queensland export beef plants are yet to get back to work after the holiday break, but already there are signs of a significant correction in grid prices for slaughter cattle compared with rates offered at the tail-end of last year.

Some processors are yet to offer grids for the new 2016 trading year, and it may yet take a week or two for true pricing signals to unfold. Others are offering kill slots, but unpriced at this stage. But from what we’ve seen, at this stage it doesn’t look like holding at anywhere near the record money experienced during the back half of 2015.

MSA grading 3 - CopyReliable quotes from competitive southeast Queensland kills we’ve seen this morning suggest a 25-30c/kg carcase weight decline on rates offered just before Christmas.

Best heavy cows for SEQ kill this week are making 465-470c/kg dressed, down from 500-505c in mid/late December. Grassfed steer price has taken a similar hit, declining from 540c/kg late last year to 515-520c for milk and two-tooth heavy steers, 515c for four teeth and 510c for six teeth.

While the A$ has been moving in exporters favour a little over the past 10 days, conditions in overseas (and domestic) meat markets remain dismal, with flat demand and considerable stocks on hand in many markets. See this earlier Beef Central report on the disturbing market climate in the US late last year.

The recent plunge in confidence on international stock markets due to uneasiness over the economic situation in China has added to that concern.

More will be discovered on slaughter cattle pricing in coming weeks, as more processors get back to work, but for the time being at least, it looks like the best is now behind us.

The weekly five-states slaughter report issued by the National Livestock Reporting Service for the seven days ended Friday reflects the slow start to the 2016 season, as many processors elected to take an extended shut-down in response to available cattle supply late last year.

Kills slow to gain momentum

Last week’s five-state tally reached just 92,055 head, still little more than half some of the huge kills experienced through the height of the mad, drought-fuelled slaughter episode seen for long periods last year.

All states were dramatically lower than the same week last year, when drought pressures forced processors back to work as early as possible.

Queensland’s kill last week reached a little over 26,000 head, a 36pc decline on the same week a year ago. NSW reached a little over 27,800 head – creating a rare episode where it killed more cattle in a week than Queensland. The NSW tally was still down 17 year-on-year.

Victoria’s kill held up better, reaching 23,800 head, but still fell 25pc short than this time a year ago, while South Australia at almost 9000 head was back 12pc in yearly comparisons.

Only Tasmania killed anything like its normal tally last week, reaching 4981 head, up 1pc on a year ago.




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