IT’S the best part of two-and-a-half years since Queensland beef processors have scheduled optional Saturday killing shifts, but all three of the nation’s largest operators have operated Saturdays at some sites in recent weeks.

There’s two reasons for it: the cattle are obviously there in numbers, and as highlighted in our pre-Beef 2018 weekly kill report, export processors have again transitioned back into profit, after a long, cold, Siberian winter when losses were stacked up like firewood.

In the past fortnight, JBS, Teys and NH Foods all ran Saturday rosters in multiple processing sites, and added a Friday kill at others that were previously operating only four days a week.

Nobody would be showing that appetite to kill cattle if the export meat job was no good, and all operators are obviously keen to make amends for the previous six months of losses.

While some processors routinely reel back in horror when Beef Central raises the subject of profitability and margin in conversation, others are more forthcoming, and prepared to share, on a confidential basis. We understand profit on cows in efficient, larger-scale Queensland plants last week was $50/head or better, and much the same on grass steer.

Favourable currency movements are helping that profit equation for exporters, with the A$ continuing a sustained slide from US81c in early February, to around US75c this week (albeit jumping half a cent again this morning).

International meat markets are holding up reasonably well, although against that, the US is logging some huge kills, recording 660,000 head last week, adding to competitive export tension in key markets in North Asia.

Attraction in Saturday shifts

An extra Saturday shift can be an enticing prospect for a beef processor, provided the cattle are available and meat market prices are favourable. That’s because much of a plant’s weekly fixed costs are already accounted-for over the previous five working days. While Saturdays typically attract a 50pc overtime penalty for labour, this is more than compensated for by the additional throughput, without adding much to fixed costs. One contact suggested a Saturday shift could work out 20-25c/kg cheaper in processing costs than the rest of the working week, given a typical plant’s cost structure.

Grids unchanged

Slaughter grids across large parts of eastern Australia remained unchanged again last week, with offers for southern Queensland slaughter in coming weeks, seen this morning, showing 470-475c on four-tooth grassfed heavy steer and best cows 410-415c. Central Queensland plants are typically 10c/kg behind that, and North Queensland 20-25c less on most descriptions.

Across the border, a large northern NSW export processor has offers for kills week commencing 18 June of 455c on four-tooth ox, and 390c on heavy cow.

Last week’s eastern states slaughter report issued by NLRS overnight showed a weekly throughout of 147,712 head – the largest seven-day kill of the year so far.

Queensland was up 10pc on the week before (fuelled in part by Saturday kills mentioned above), at 78,557 head. NSW recorded a tally of just short of 34,000 head, up 6pc year-on-year, while Victoria’s kill at just over 25,000 head was +24pc on this time last year.

South Australia remains heavily impacted by the TFI Murray Bridge plant closure due to fire, being down 31pc on this time last year, at 5257 head, while Tasmania’s kill was +5pc year-on-year at 4868 head.

Is southern Australia approaching herd liquidation?

As the devastating drought continues to unfold across large parts of southern Australia, the question is again being asked: Is southern Australia again slipping into herd liquidation phase?

There’s plenty of evidence to support it, and processors across NSW and Victoria are convinced it’s taking place.

The past three weeks of female slaughter (Qld and NSW are the only states where female/male numbers are isolated by NLRS) tells a grim picture. Anything above 44pc females in the weekly kill mix typically represents herd reduction.

Last week, the female percentage of slaughter in NSW was 52.7pc; the week before an incredible and perhaps unprecedented 56.6pc; and the week before that, 55.2pc.

“The decimation of the cow herd in the south is really worrying,” a prominent processor’s livestock manager told Beef Central this week.

“We’re hearing about people across NSW and parts of Victoria who have already culled their empty cows, their PTIC cows, and the next step is splitting cows and calves. This current event is now a major setback for the national herd rebuild. It’s set back herd recovery across the region by at least 12 months, and possibly two years. When it ends, nobody knows, but the impact will be profound,” he said.

The dire circumstances followed earlier heavy turnoff in Queensland before March rain in some areas. Large numbers of breeders continue to flow out of the Barkly Tablelands region in the Northern Territory, where conditions are dry to very dry, and much of the top third of Queensland is again under pressure.

“The sell-off that we’re seeing now is beyond significant – it nearly at the catastrophic stage, and there’s no sign of respite,” a multi-state processor said. “We’re as badly off as we were in 2015, in many areas.”

At the current high rate of liquidation, processors this week have told Beef Central they think the southern regions have perhaps six weeks to go, before all the ‘hard decisions’ are made. Others say access to numbers is already in decline and may drop of sharply. Southern cattle now being processed are showing clear signs of seasonal impact on condition.

“There will be natural attrition, with nothing left worth processing by the end of June or mid-July across the south,” one processor said. “Slaughter cattle will be incredibly hard to come by after that.”

In Queensland, processor livestock buyers are now pointing at August as looking ‘horrible’ from a cattle supply perspective, given early vigorous processing activity due to the hot, dry summer weather.

The fact that the winter oats crop in many areas from southern Queensland well into NSW has failed will only add to that August void, as will the absence of significant numbers from the Channel Country this year.

Already, several Queensland processors are talking prospects for short-term plant closures, come August-September.

While some questions have again been raised about the accuracy of the latest June quarter feedlot survey results, which put just over a million head on feed, some processors appear to be building a supply of grainfeds for turnoff during the July-August period, as a form of insurance.

That’s despite some head-spinning losses recorded on grainfed cattle in the same period last year, when 100-day grainfed ox were losing up to, and $200-$300 a head for processors who bought forward.

Grain price this year (see Friday’s article Darling Downs feedgrain hits $400/t) may make any real build-up in numbers on feed much less likely, one processor said.