Weekly kill: 5-10c/kg rise in some Qld grids, as processors ‘blink first’

Jon Condon, 23/02/2016

SOME Queensland processors have lifted direct consignment slaughter grids 5-10c/kg this week, in what appears to be a combination of ‘who blinks first’; a modest improvement in beef trade outlook in some export markets; and a need to re-align over the hooks rates with saleyards pricing.

oakey-processing-nipponOne larger multi-site processor lifted grids 10c/kg across the board on its Queensland offers mid-morning this morning, bringing grids north of the border back into alignment with southern grids some of which lifted a similar amount last week

Another large multi-site SEQ export processor yesterday lifted premium lines like EU and MSA 5c, with most other commodity lines up 10c.

It’s placed the market for four-tooth heavy grassfed ox today at 520c; 525c for 0-2 teeth; 475c for heavy cows top cell; EU grassfed steer 535-550c; 100-day steer 525c (up 5); MSA steer 550c; and PCAS steer 580c.

What’s significant is that it’s the first processor grid rise seen since around October last year, when there was a brief lift before grids started to decline heading into year’s end. Some Queensland grids had remained unchanged since the opening gambit back in mid-January.

Don’t read too much into the change in pricing, however. It has nothing to do with any increased appetite among processors to ‘chase’ cattle, through higher pricing. It simply illustrates that killing schedules at major export plants like Beenleigh (active for only two days’ kill each week recently) and Dinmore (expected to skip two more days this week) could not go on forever at such low rates of throughput, without doing damage to brand customer relationships.

Processors had to do ‘something’

Effectively, processors have had to do ‘something’ to rekindle a little momentum in flow of cattle, but it has nothing to do with profitability or revenue via the meat channel, in Beef Central’s opinion.

A second factor in this week’s grid movement may be just a little light on the horizon in terms of outlook in some export beef markets. There’s been a soft rise over the past six weeks in the imported 90CL grinding beef price into the US, but countering that, there’s also been an overnight spike in the value of the A$, rising to US72.5c this morning – it’s highest level since the start of the year.

Another part of the grid adjustment seen this week may also reflect processors’ need to re-align with saleyards prices for slaughter cattle, which appear to have crept a little ahead due to competition for increasingly scarce slaughter stock.

Take yard fees and agent feeds out of the equation, however, and there’s still little in it between direct or saleyards marketing options in Queensland, at least. Cattle at Dalby last week looked just a little dearer than last week’s grids, but not enough to compensate for selling costs.  One mob of backgrounders sold at Dalby last week cost the vendor 5.42pc of the total sale proceeds on selling costs, Beef Central was told.

Across the border, an export processor in northern NSW which lowered its grids 5c last week will consider its current pricing offer this afternoon, Beef Central was told. Southern states grids are now close to, or identical in value with those in Queensland, with the exception of cows, generally a little cheaper in the south.

Slaughter tally eases further

The ongoing tight supply situation was reflected in another incredibly low weekly kill tally reported last week.

The NLRS five-state report for the seven days ended Friday showed just 132,906 head processed for the week. Queensland’s kill rose a fraction on the previous week to 59,036 head, but that’s back a huge 27 percent on this time last year.

NSW was back 3pc on the previous week to 32,119 head (down 25pc year-on-year); and Victoria back 2pc to 28,809 head (-10pc on last year).

Only South Australia killed as many cattle as the previous week, reporting a tally of 8163 head, back 20pc year-on-year, while Tasmania was -4pc to 4770 head.




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