Processing disruptions in three states caused by wet weather-related cattle access issues led to a three percent decline in East Coast slaughter numbers last week.
The two largest processing states, Queensland and NSW, both recorded declines, while States further south struggled to maintain tallies, at best.
With further substantial rain this week, the extent of boggy and difficult paddock conditions in Victoria was in clear evidence to Beef Central yesterday, while spending time with local commercial Angus producers in the lead-up to today’s Angus Australia National Conference being held in Ballarat.
Keep a lookout for case study articles on these progressive and innovative producers in coming weeks.
NLRS reported saleyards numbers throughput in NSW back 14pc last week, with biggest declines at Tamworth (-37pc), CTLX (-21pc), and Wagga (-17pc). Numbers at Victorian sales were back 28pc, and in Queensland 26pc, typified by the cancellation of the Roma prime sale.
As a consequence of the weather conditions impacting on both direct consignment and saleyards activity, grid prices in Queensland largely remained unchanged last week, after earlier 5-10c slides.
In the medium term, as paddocks dry out and supply momentum rekindles, works grid prices are likely to come under further pressure, however. Enhancing that prospect further is the currency trend, now well into the US102s, up at least US5c from where it sat a month ago.
Last week’s four-state slaughter report compiled by the National Livestock Reporting Service produced a kill of 132,399 head, down about 5000 head on a week earlier.
This figure completes a relatively subdued first six-months kill across Eastern Australia, down about 3pc in numbers compared with the same period last year. As a means of comparison, NLRS recorded just one week for the January-June period this year where Eastern States kills exceeded 140,000 head, the number where the industry starts to talk about ‘full’ kills. For the same 26-week period last year, there were no less than 12 weeks where kills topped 140,000 head and several that exceeded 150,000.
The average weekly four-states slaughter so far in 2012 has averaged about 120,000 head – 3pc below where it was at this time in 2011. These statistics are contributing to a mounting expectation of comparatively larger kills over the July-September period compared with a year ago, to compensate.
As reported last week, MLA recently issued a forecast that Australia’s third quarter beef kill (July-September) could rise to 1.95 million head, and continue at similar levels into the fourth quarter. The forecast puts total national kill this year at 7.55 million head, somewhat surprisingly up about 290,000 on 2011, due mainly to sustained seasonal conditions and live export cattle diversion into processing channels.
In a state-by-state breakdown of last week’s kill, Queensland was the worst affected, easing 7pc to 67,744 head – back 8pc on the same week last year. The most obvious reason for last week’s slump was the day’s kill lost at JBS Dinmore, the nation’s largest plant – due to industrial action on Friday. Adding to that was time lost or reduced tallies at Teys Australia’s Biloela and Rockhampton plants and Nippon Mackay, all impacted by the weather.
The NSW kill last week of 32,650 head was down 1pc on a week earlier and still 11pc short of where it sat this time last year. Victoria was 2pc better than the previous week at 19,933 head; South Australia lifted 3pc to 7519 head; and Tasmania eased 2pc to 4553 head.
Grid prices steady
Shortened supply due to weather put paid to any further deterioration in Southeast Queensland direct consignment prices last week, with major processors reporting their grids basically unchanged from a week earlier.
This followed a 5-10c/kg easing in price offers in the preceding fortnight due to a resurgent A$, and subdued international demand for both cuts and grinding meat.
Typical SEQ grid prices sourced by Beef Central yesterday included four-tooth grassfed Jap ox 310-315c, milk and two tooth 320c, cows 280-295c. MSA grassfed steers (boning groups 1-10) sat at 330-335c, with EU steers currently around 355c/kg.
Exporter meat trading desks report continued weakness in the market on the international front. That’s not that unusual at this time of year, but the A$ has not helped that process, making importers cautious about buying beef in volume today that may be relatively cheaper next week due to currency movement.
US grinding beef outlook
Imported grinding beef trading remained sluggish in the US last week as end-users displayed reluctance to buy forward for July and August needs, Steiner Consulting reported on Friday.
“Little has changed in the attitude of buyers: given ongoing uncertainty and heightened risk, they prefer to stay short-bought, with minimal out-front coverage,” Steiner said.
Some regular large users continue to purchase product but as some of this volume is bought direct, it does not figure in the daily trade.
Smaller end users see little benefit in booking out-front orders. A wide range of prices was reported late last week, in part reflecting the unwillingness of Australian packers to lower their offers, while at the same time US end users/importers continue to bid even lower in light of the challenged demand for imported product.
Amid all the confusion, it is important to keep in mind the seasonality for both domestic and imported lean grinding beef in the US market, heading into northern hemisphere autumn.
Prices so far this year have been remarkably consistent with year-ago trends, Steiner reports. While compared to a year ago prices are higher, normally there is a tendency for domestically-produced lean beef to drift lower into August and September.
The current spread of about US20c/lb between fresh domestic and frozen imported 90CL should offset any expected pull-back in domestic prices, Steiner says. But end-users remain unconvinced, and it is unlikely there will be much purchase activity until later in the summer as US autumn demand comes more into focus.
Prices for fatter 50CL domestic beef trim have fallen to around 50c/lb, and fears are emerging that the market for fat beef trim has been permanently damaged now that Lean Finely Textured Beef production in the US has declined by almost 75pc.
All the extra fat trim is now either going into rendering, or pressuring overall fat trim values lower.
Elsewhere in the US beef market complex, there has been a lot of talk about the supply of US cows coming to market. There is little question that deteriorating pasture conditions have once again pressured cow-calf producers.
However, slaughter data continues to show that so far cow meat supplies remain below year ago levels. Total US cow slaughter since May is down 31,400 head or 3.8pc from a year ago. But pasture conditions remain critical across much of the US Midwest and Great Plains regions, particularly during current hot, dry conditions. The US weather conditions are also impacting on the US corn crop, signalling that corn prices may well rise above $6/bushel again next year.