WHILE the international and domestic beef trade out of Australia continues to cop a buffeting from COVID-related demand factors and high rates of kill in competing exporter countries, currency movement has played a big role in recent slaughter cattle pricing trends.
Some export processors have lowered their grid price offers this week, specifically on the recent performance of the A$, and its impact on Australian beef’s competitiveness in international markets.
As the National Australian Bank graph published above shows, August proved to be a big month for A$/US$ cross rates, rising by 3.2pc, driven mostly by US currency weakness. The A$ started the month at US71.43c, reaching a high of US74.03c on 31 August, before pulling back slightly to end the month yesterday at US73.76c. International rather than domestic influences dominated much of the currency’s intra-month movement, NAB said.
Imported grinding beef prices into the US have continued to retract, with the 90CL imported indicator falling about A40c/kg over the past two months, to A667c/kg CIF last week – it’s lowest point since June last year. Currency value is a significant part of that trend.
As an example, one processor described the impact that currency movement had had recently on large midfed (150-day) branded beef cuts programs, which went on feed back in late March locked in at a currency value of around US57c. Since then, the cross rates had moved more than US15c, or 26pc, meaning the unprotected trim and offals from those carcases, particularly, have been savagely eroded in value.
Grids soften 10-30c
Despite the obvious deep deficit seen in slaughter cattle access at present, larger processor grid offers have declined by anywhere from 10c/kg to 30c/kg at sites across Australia over the past ten days, as a direct result of currency trends and their impact on export meat sales. Others say COVID Jobkeeper support for some processors is also a factor.
Best offers seen this week from competitive processors in Southern and Central Queensland ranged from 610-630c/kg for four-tooth heavy steers (some of those higher grids for HGP-free only), and 550-565c/kg for heavy cows.
In Northern NSW, a large export processor is offering slots for kills week commencing 7 September of 560c/kg on four tooth steers (HGP-free only), and 540c/kg on quality cows.
Further south, southern NSW export processors are this week offering 605c for four-tooth export steers and 550c for heavy cows, with competitive South Australian export processors offering similar money.
- Last week’s NLRS Eastern States slaughter commentary will be added to this item later today.