Processing

Weekly kill: What are unwanted Indo steers worth in southern markets?

Jon Condon, 14/07/2015

NEWS yesterday that Indonesia will release permits for only 50,000 live export cattle this third quarter has sent cattle market watchers scurrying for their calculators to do some sums on alternate markets.

The northern live export industry had an ‘aspirational’ figure in mind of 200,000 head for Indonesian live exports this quarter, based on likely Indonesian demand. While in hindsight that may have been a little optimistic, third quarter exports to Indonesia over the past five years have averaged almost 135,000 head, records show.

Transport Pictures - Martins 1It means that in theoretical terms, even given the lower of those two figures, there’s 85,000 northern feeder cattle that may otherwise need a home. Granted, some of them may be taken on to heavier weights for Vietnam and other livex markets, but weightgain across large parts of the NT will be limited, at best, in coming months.

So what are those cattle worth in southern or central Queensland markets, for placement on oats or in feedlot programs? It’s a calculation some stakeholders have been toying with in the past 24 hours since the permit announcement, particularly given the real shortage of feeder/backgrounder cattle in Queensland at present.

One contact estimated that southern buyers would probably pay no more than 235-240c/kg landed, for a 350kg northern-bred Brahman steer for growing/finishing in southern or central Queensland. That price would include a significant freight component.

Similar cattle have been making 260-270c/kg ex Darwin for the live trade recently. That suggests a 50c/kg price discount on recent boat prices, should any of those boat steers head south.

In comparison, one large feedyard near Toowoomba is this week offering 275c/kg for moderate Brahman content milk-tooth steers +380kg, while Beef Central’s most recent breakeven published last week quoted flatbacks 450kg, ex Downs at 280c/kg liveweight.

As last year illustrated, while most Queensland lotfeeders are looking for feeders with less hump, higher indicus cattle can be acceptable, if the price is right.

However there’s several factors that potentially diminish the attraction of those northern boat cattle in the southern Queensland market, Beef Central’s contacts suggest:

  • The freight factor, adding at least 15c/kg to their purchase price
  • The breed factor, making them harder to fit into MSA and other premium categories
  • The HGP factor, with widespread implant use in the NT
  • The weight-for-age factor – they’re not young cattle, making them less attractive than better grown southern cattle, which can again impact dentition and MSA ossification results.

‘It would be a different story if there had been a massive flow through the Channel Country last summer, where some of those cattle could head, and where their freight component would be soaked up overnight,” a contact said. “But the channels has not had anything like a good season.”

 

Kills continue to show easing trend

Turning to last week’s Eastern states weekly kill, slaughter numbers continued their recent trend lower, with the four mainland states plus Tasmania recording throughput of 163,673 head, back another 1.5 percent on the week before.

It’s the lowest full-week kill (not impacted by public holidays) recorded since January.

Weekend shifts are rapidly being jettisoned by processors in Queensland and further south, as cattle become harder to procure. Queensland export processors spoken to this week said their forward bookings were now looking distinctly thin, compared with a month or two ago. Sheds around Rockhampton appear to be a little better positioned, but those clustered around southeast Queensland are back to a week, or two at most, for advance bookings, Beef Central understands.

The state’s kill last week does not yet reflect that, but it’s only a matter of time. Queensland last week processed 88,645 head, 1pc up on the week previous, but still back a little from the plus-90s figures seen earlier. Year-on-year, Queensland’s kill is still high, though, being +3pc on this point in 2014.

For those keen on statistics, the state’s kill last week was one of the largest proportions of the overall Eastern states kill tally in recent times, accounting for more than 54pc of the overall throughput. That’s because the slide in slaughter numbers, at this point, has been much more pronounced in southern states.

Kills in NSW last week slid 11pc, to 35,904 head, while Victoria, at 26,177 is also under pressure, back 15pc on this time last year. South Australia’s kill last week was -10pc on the previous week at 7986 head, while Tasmania was +2pc at 4961 head.

The growing difficulty in raising a kill is being reflected in saleyards prices – particularly those in Queensland – which have progressively stolen a march over direct consignment cattle values in recent weeks.

Good numbers of reasonable quality cattle were yarded at Roma, Dalby and Emerald again last week, displaying prices in general probably 10-20c/kg better than current Queensland processor direct consignment rates.

That trend has been in evidence now for the past three or four weeks or so, perhaps largely reflecting processors battling to secure a share of a declining slaughter cattle pool.

If history is any guide, saleyards pricing often jumps ahead of direct consignment a little on first signs of a rising market, but it’s often not long for grids to catch up, or even overtake that advantage.

Historically, works cattle buyers try to ‘defend their grids’ when buying saleyards cattle on a rising market, in order to keep some relativity, but at times like this, such strategy can go out the window. That applies especially when commission buyers arrive at a specific sale ‘on a mission’ to purchase ‘four-decks’ or ‘eight decks’ to build a kill shift around.

As stated above, the other factor is that processors’ forward bookings are nowhere near as congested as what they were earlier.

The demographics are changing, and it’s a very different supply/demand environment than what we’ve experienced for the past six months.

Grid offers from southeast Queensland processors this week are basically unchanged, after some substantial advances the week before. Best cows this week are being offered at 435c/kg, four-tooth steer around 455-460c, and 465c for milk and two-tooth steer.

For example there was solid competition from processors at Roma prime last week, where numbers lifted 40pc, with large numbers of 3 and 4 score cows penned. Cow prices rose 4-7c/kg liveweight. Bullocks sold to 270¢ and averaged 262¢, up 5¢, while heavy grown heifers averaged 240¢/kg and were relatively firm on the previous sale.

 

EYCI cracks 200c/kg on year-earlier rates

At the conclusion of Monday’s markets the Eastern Young Cattle Indicator reached 538.25c/kg, a new record. Compared with year-earlier figures, the EYCI has now broken through the +200c/kg barrier, being 202.52c/kg higher than mid-July last year.

Trade and medium steer indicators last week were firm, at 307¢ and 279¢/kg, respectively. Heavy steers jumped 12¢, to 289¢, while medium cows lifted by 2¢, to 215¢/kg. The feeder steer indicator was unchanged on 302¢/kg.

Following the surge in physical market prices, over-the-hooks indicators lifted in all of the eastern states last week week, with the largest increases for finished cattle, as supply continues to tighten. Premiums for steers in Victoria and NSW remain evident, compared to indicative prices in Queensland, however OTH cow indicators are still comparatively close between the three states.

MLA reported trade steers (240-260kg carcase weight) in NSW increased 17¢ week-on-week, to 476¢, while an increase of 15¢ was recorded in QLD, where the indicator reached 450¢/kg. Despite reports that offerings were generally steady in Victoria, the OTH trade steer indicator jumped 14¢ to 512¢ – 62¢ and 36¢/kg dearer than QLD and NSW, respectively.

Heavy steer (300-400kg) indicators experienced a similar lift, with NSW and Victoria both increasing 16¢ on last week’s levels, to 487¢ and 504¢, respectively, while the Queensland indicator reached 449¢, up 11¢.

Medium cow (260-280kg) OTH indicators jumped 10¢ in both QLD (398¢) and Victoria (413¢), while NSW rose by 6¢ to 400¢/kg.

 

 

 

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Comments

  1. Stan Emmon, 16/07/2015

    Sounds like overseas want to drop the price on the export cattle to me. Cheap beef at the expense of Australian farmers. Don’t play into the political game. Stan.

  2. Michael Teelow, 15/07/2015

    Time to stop all the bull
    exporters were struggling to fill the last quarter taking steers down to as low as 220k and having to go further than ever before to fill boats Any excess that misses out will catch the heavy boats

  3. Ferdinand Rondong, 14/07/2015

    The decrease of the live cattle export from Australia to Indonesia is very political. It looks like the retaliation to Abbot’s policy to Indonesia.

  4. Angus Mitchell, 14/07/2015

    As an industry one would think we would report on the massive beef shortfall looming in the Indonesian marketplace, rather than causing panic at home

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