Weekly kill: Numbers ease as Easter impact slows activity

Jon Condon, 30/03/2016

THE Eastern States weekly kill took a predictable dive last week as the first of the holiday-shortened Easter weeks took effect.

MSA grading 3 - CopyThe five-state weekly tally to Friday dropped 28,000 head or 19.8pc, and a number like that is likely to be repeated for the week we are currently in.

There’s been no significant change to over-the-hooks pricing since before Easter, with Queensland grid offers seen this morning showing heavy cows from 445c/kg to 465c/kg and grassfed four-tooth ox 490-510c.

It’s easily the lowest point seen in grid pricing since a brief slump last October when cows got down to 480c briefly (14 Oct), but still represents significant processor losses on most, if not all slaughter cattle descriptions, due to continuing softness in the export meat market and an A$ well above US76c. Equivalent grids in Victoria and southern NSW this week were 530c/kg for the four-tooth export steer and 460c/kg for heavy cows.

A large multi-site processor whose SEQ grids were at the top end of that range this morning added a qualifier, however, saying it planned to review current Queensland grid pricing this afternoon.

For processors at the bottom end of that unusually wide spread, it may have an effect on supply, but the companies involved said they were prepared to sit-out the current conditions with dark days at plants if necessary, rather than chase cattle while accruing large losses. Beef Central believes there may be some ‘wriggle-room’ for negotiation on some of those lower grid offers, however, especially for volume and/or quality.

In other market segments, grainfed 100-day cattle spot price this week is 515c, although two major grainfed processors stopped quoting until after Easter. Forward pricing on 100-day cattle is very hard to find this week, due to the current uncertainty in the meat market (see this morning’s separate report.) MSA grassfed steer for Queensland kill is quoted this week at 525-530c. Equivalent grids in northern NSW this morning had MSA grassfed steer at 530c (GHP-free, MSA index 61+).

What’s also evident in early post-Easter markets this week is a softening in store cattle price, with feeder steers at Dalby yesterday making around 300c. Those same feeders a fortnight ago were making 325-330c.

Will carcase weights start to rise this year?

As is often the case with the Australian cattle industry, there’s often some handy cues that can be taken from events in the US industry, as they unfold. The US is perhaps 12-18 months ahead of Australia in terms of its own drought-impacted herd recovery, but one of the interesting points worth noting is what’s happening there with carcase weights.

US carcase weights are currently considerably above year-ago and five year average levels.

Normally US fed steer weights drive lower into the northern hemisphere spring, but a relatively mild winter has had a very limited impact on fed weights this year.

This morning’s Chicago Mercantile Exchange Daily Livestock Report said last Thursday’s USDA report that broke down slaughter steer, heifer and cow weights was surprising. It showed US fed steer weights for the week ended March 12 at 896 lb carcase weight (more than 407kg), up 11.4kg or 2.8pc on this time last year. It actually topped the magic 900lb for the first time ever back in January – a significant milestone. The average for all US slaughter cattle (cows and heifers included) for the week ended March 12 was 834 pounds, 2.2pc higher than a year ago.

All that equates to the equivalent of an additional 12,000 slaughter cattle added to the US weekly kill. DLR expects US slaughter this week to be 434,000 head, 4pc higher than the previous year, but US slaughter could climb to 480,000-490,000 head by late April and early May.

Are weights likely to trend higher in Australia, in the cattle shortage era?

A processor contact told Beef Central it looked highly likely that carcase weights would climb this year. Dramatically fewer cows in the eastern states kill, a greater proportion of grainfeds in the overall mix, and the generally (although not universally) improved seasonal conditions would all contribute, he said.

Slaughter numbers likely to rise

With Easter now behind us, there’s likely to be a traditional surge in cattle numbers coming forward heading into April and May, as more northern cattle mustering programs activate, and conditions start to cool-off.

Export processors across Queensland and NSW are still operating pretty-much ‘hand-to-mouth’ in terms of cattle supply, but most expect bookings to start to rise heading into April after the holiday period clears and people return to work. One large Queensland plant spoke to this morning is now covered until week commencing April 11 – partly due to some big outflows of grainfed cattle.

Apart from the obvious disruptions to throughput caused by consecutive short weeks caused by Easter, kills numbers in coming weeks – certainly in Queensland – will be impacted by several other plant happenings.

Kilcoy Pastoral Co has now started its three-week scheduled closure – a routine event each year around Easter time for maintenance and any necessary plant upgrades. That will remove up to 850 head/day of heavy grainfed cattle from the Queensland weekly tally, until Kilcoy gets back to work sometime around mid-April – possibly the 17th.

At the other end of the state, JBS Townsville this morning spilt its first blood for the season, after a prolonged summer shutdown driven by cattle shortage. A reduced daily tally is planned, with preliminary kills of 660 head per day, but hopefully growing to full 903/day capacity as the year unfolds. Effectively, it’s likely to add an additional 3400/week to Queensland’s weekly kill numbers from next week.

Easter kills ease substantially

In a breakdown of last week’s Eastern states kill, Queensland slaughtered 54,520 head to Thursday, back 25pc on the week previous and 37pc below this time last year (Easter last year fell a week later).

The NSW kill last week was 27,003 head, back 23pc on the previous week and down 38pc year-on-year, while Victoria’s kill at 22,083 head was down 5pc, but back 35pc on 2015 performance.

South Australia killed 6312 head for the four-day week last week, down 35pc on last year, while Tasmania processed 3876 head, back 12pc year-on-year.




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