TWO consecutive Easter holiday-shortened weeks have slowed beef production across eastern Australia, but not enough to head-off a supply shortfall for some Queensland processors, who this week pushed grids higher in a bid to underpin supply.
Queensland slaughter grids seen this morning had some offers up 5-10c on last week, as gaps have started to appear in some kill rosters for the next fortnight. Best offers for slaughter in southern Queensland this morning had 500-505c/kg for four-tooth grassfed ox, and 445c/kg for heavy cows. Other offers in southern parts of the state were still 5-10c behind that, while Central Queensland and North Queensland sheds were behind by 10c and 25c, respectively.
With the JBS Townsville plant now operational for the year after lengthy weather delays, there has been a cascading effect, ‘robbing’ plants further south of stock that earlier in the year were being processed in central and southern parts of the state.
The current price window is likely to be short-lived, however, with growing expectations that late April and early May will see a fair few northern slaughter cattle about, after earlier rain. Nobody wants to sell cattle that are still hitting their straps after late February’s weather change, but winter and first frosts are now on the horizon.
More reports have filtered in from processors this week about offers for particularly big lines of slaughter cattle from pastoral company-owned properties on the Barkly, which has largely missed out on a traditional wet season this year. More on that in a separate report later this week.
A market segment currently worth noting is EU grassfed ox, where a substantial 35c/kg premium is again evident in Queensland grids over conventional four-tooth ox. That’s opened up dramatically since late last year, when some grids had EU grass offers only 5-10c/kg above mainstream cattle. It’s not unusual to see premiums open and recede during the year for EU-eligible stock, but it’s been some time since the premium has been as large as it currently is.
With the uncertainly surrounding Brexit, some processors suggested they were writing some reasonable money for eligible EU beef into Europe at present. Shortage of eligible stock is contributing, but there’s an expectation that Central Queensland – something of a ‘heartland’ for EU supply, and an area that has largely had good rain since February – will account for strong supply around mid-year.
Some disquiet is also emerging about the EU grainfed market and where it will trend, following talk about possible agreements between the EU and the US over an exclusive grainfed high quality beef quota, which could squeeze-out or limit Australian supply later this year. Lots of speculation is flying around the industry on this, but in truth, at this point, nobody knows where access will end up.
Also evident recently is a big price gap that has emerged this year between northern (Queensland) and southern (VIC, NSW and SA) prices for slaughter cows.
Supply of cows has been strong in the south in the early part of this year, evidenced by Saturday shifts being scheduled for a period at several plants like JBS Brooklyn and Scone. Others said the southern market late last year for cows had become over-heated, with too many southern operators competing for too few cattle, forcing prices on cows to unsustainable levels.
Slow returns to work after the Easter
The weekly NLRS eastern states kill report issued a few minutes ago had a tally of 108,959 for the week ended Friday, down 22pc on the week before. This current week is likely to be little better, due to the Easter Monday holiday.
Queensland’s kill last week was around 53,200 head, with the female component accounting for less than 36pc. NSW processed just over 27,000 head, down 10pc on this time last year, while Victoria was at 20,800 head, still 7pc higher than last year, partly due to some inflow from the closure of the TFI Murray Bridge plant in SA.
South Australia’s kill reached 3942 head, down 49pc on last year for the reason outlined above, while Tasmania was -15pc at 3918 head for the week.