Processing

Weekly kill: Qld’s record tally highlights north’s drought agony

Jon Condon, 12/05/2015

QUEENSLAND produced an all-time record weekly kill last week, going past 90,000 head for the first time in history, as current drought, the prospect of El Nino, and other weather and market influences took full effect.

The weekly tally for Queensland reported by the National Livestock Reporting Service yesterday was 90,749 head, up 3pc on the week previous, and still 3pc higher than already-high kills this time last year.

MSA grading 3 - CopyIn any other year apart from 2014 and 2015, a Queensland weekly tally above 77,000 head at this time of year is rare, but these are anything but normal times. It shows just how entrenched the current drought cycle in northern Australia has become.

Many Queensland plants are killing at their physical limits at present, including overtime and weekend shifts where possible, to accommodate the cattle flows. Human endurance and manpower is now shaping as the next limiting factor.

The slaughter momentum in Queensland is the biggest contributor to the Eastern States five-state kills averaging well above 177,000 head for the past four weeks since Easter.

If this keeps up, the national herd decline that started in 2014 will continue to gather pace, and some onlookers are already talking a herd size in the ‘24-millions’ by year’s end, if things continue as they are.

“This herd is just disintegrating in front of our eyes,” a Central Queensland processor contact said this morning. “We’re just seeing bookings for miles of cows in coming weeks,” he said.

Plants in Central and Northern Queensland report heavy bookings now out through June. While plants further south in SEQ are not as badly congested in their kill rosters at this stage, there is clear evidence of big flows out of drought-affected regions in the northern and western parts of the state – areas like Charters Towers, Hughenden and Richmond – back into the southeast corner.

There are a combination of influences that appear to be driving high current rates of kill. Some obvious, others less so:

  • About 70 percent of Queensland, which accounts for roughly half the national beef herd, remains in drought, with El Nino predictions suggesting little relief is likely any time soon.
  • The arrival of winter is prompting many NSW and Queensland producers – even those with a decent body of feed – to lighten-off numbers further, before feed quality deteriorates
  • It’s not all weather driven, though. Current attractive rates for slaughter cattle are making the producers’ decision to sell much, much easier. Four-tooth steer at 450c this week and cows at 415c are at least a dollar a kilo higher than the same time a year ago. On a 330kg grassfed steer, that’s put another $330 into the vendor’s pocket. It means that for those producers who have no option but to sell, they are getting a much better return this year than last. That pricing, of course, is driven by continued strong international beef demand, assisted by this year’s currency relief. This time a year ago, the A$ was still well above parity, instead of below US80c as it is today.
  • The early finish of the northern monsoonal wet season is seeing Barkly Tableland cattle starting to flow into Queensland plants a little earlier than normal, some processors report.
  • Concerns over cattle access with so many producers away for Beef 2015 week perhaps saw some processors ‘load-up’ with slaughter cattle in advance as a precaution, market watchers suggested.

 

Grids edge higher

Despite the huge kills being reported across Queensland presently, public grid prices – perhaps remarkably – continue to strengthen.

While Beef Central did not post a kill report last week due to Beef 2015 commitments, many large southeast Queensland processors have lifted direct consignment rates on steers and bullocks another 5c/kg, on rates seen a fortnight ago. Cow money is largely unchanged on late April.

We’ve seen grids this morning for SEQ kills with YG grassfed steer (0-2 tooth) at 440-450c/kg, and four-tooth, 435-440c. Heavy cow prices are currently 410-415c among competitive processors.

In the premium segments, PCAS cattle are this week making a phenomenal 530c/kg in Queensland and 550c/kg in the south (that’s $1485 for a typical 270kg dressed weight PCAS steer). EU grassfed steer this week is at 520c/kg.

 

Southern states maintain high kills

In southern states, NSW recorded a kill last week of 41,584, still close to record throughput, and up 7pc on this time a year ago. Victoria and South Australia, likewise, recorded big kills for this time of year at 30,531 head and 10,141 head respectively. Tasmania was down a little for the week at 4545 head.

Whilever those southern kills remain as high as they currently are, there’s no real sign of trying to buy cattle out of Queensland this season yet. That’s likely to change as southern number show normal seasonal cycles and start to slip.

When that happens, and to what extent, will depend on southern processors’ appetite to pay higher prices for slaughter stock. It only has to be the freight difference between northern and southern grid prices (typically around 15c/kg) to encourage Victorian and southern NSW cattle buyers to head north at this time of year, but given the $1/kg dressed weight price rise since this time last year, it will be interesting to see if that continues in 2015.

While ever Victoria continues to bang-out  +30,000 head in a seven-day kill, it would indicate they still have enough local cattle around them. Get back to the early 20’s and things might change.

 

Industrial action might curb upcoming kills

A possible roadblock for such big kills in coming weeks could be the impact of further industrial action as part of the Commonwealth Public Sector Union protected industrial action over its wage claim.

Plant meat inspectors and vets may be affected, as discussed in this earlier Beef Central report.

Further stoppages could take place next Tuesday, May 19, authorities have been advised. The previous stoppage (in the form of an overtime ban) last Friday and Saturday week caused only minor disruptions, Beef Central understands.

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