BEEF exports of over 110,000 tonnes per month are not common in Australia. 2019 was the last time exports reached this level and before that 2014 and 2015. The common link in those years was elevated slaughter of female cattle due to worsening seasonal conditions.
Subscribe now for unlimited access to all our agricultural news
across the nation
or signup to continue reading
In 2019, slaughter shot up to 8.5 million head from 7.8 million the year before with females representing a very high 56 per cent of the total. Both 2014 and 2015 had kills of more than 9 million in response to difficult seasonal conditions.
This raises the question of why, in a year that could not be considered to be in cyclical decline, has May tonnage suddenly spiked?
Certainly, there are parts of southern Australia that have experienced dry conditions which would help to explain the current elevated female kill in Victoria and to a lesser extent, New South Wales but the vast majority of northern Australia has had excellent rainfall. Reports suggest that parts of the north that experienced a later start in the recent La Nina phase are still in rebuild mode.
That said, more than four years have passed since the current run of seasons started in 2020. This must mean more slaughter cattle in the pipeline, and with only the momentary dry pinch in August/October last year, more weight as well.
From ABS data, average carcase weight in 2019 was 283kg. First quarter this year is 315kg.
Average weekly kill in 2019 was 163,000 head. Average weekly kill in Q1 this year was 139,000 head.
2019 passed the 110,000t/month export milestone through sheer numbers of cattle processed. 2024 got there in May because of improvement in weekly kill numbers, 22 regular working days in the month and, most importantly, through maintaining a good level of carcase weight.
Normally carcase weight and slaughter numbers are inversely related. That is, as the kill increases, average carcase weight drops.
But this year that relationship may not be as strong as usual because as cattle numbers have increased with the stringing together of good seasons, the general absence of setbacks should also mean better weights.
Projecting this forward means a couple of things.
At the eight-week point of Q2, weekly slaughter is averaging 152,000 on MLA figures adjusted for data capture shortfall. If slaughter continues at the most recent rate, average weekly kill for all Q2 should step up to around 158,000.
Given the extras and Saturdays that are currently being worked it may be that this is close to full capacity for the time being. Allowing just a little extra in Q3 of say 160,000 per week and dropping back to say 155,000 in Q4 means a total kill for the year of 7.95m.
Allowing for some slippage in average carcase weight, this should still mean around 1.25 million tonnes of beef exports for the year.
That's an increase of more than 160,000t on last year. To put that into context, Australia's average yearly volume to the Korean market alone over the past 12 years is 160,000t.
If all goes well, 2024 will be one of those rare occasions when Australia produces and exports a lot of beef from a relatively modest kill. In contrast, 2014 shipped 1.28mt but it took a kill of 9.2 million head to do it.
However, if 2024 turns dry and cattle really start to spill out, there will be a need to accommodate considerably more than the projected 7.95 million above. The concern is that with labour issues still confronting processors, there may be little scope in the short to medium term to go beyond slaughter levels currently being achieved.
Two weeks ago, a major Queensland processor commented on the step-up in cattle supply with the onset of winter. Back then he already had most of June covered.
With last year still fresh in mind, his concern was where the cattle would go if numbers blew out in a similar dry pinch. Commenting on the current level of overtime in his plants, he said they could not continue this forever as they had to look after their workers.
Strong supply eases rates
IN the run-up to the end of the financial year, meatworks are well placed for cattle with generally four weeks' cover at this stage. In north Queensland, the supply position appears even stronger with producers booking space a long way out.
This degree of comfort has resulted in at least one of the majors applying a 10c rate adjustment this week with YP ox on their south-east Qld grid now 510c/kg and heavy cow 440c/kg. Others for the moment remain at 520/450c/kg.
If the market here continues to ease, it can be expected to bring southern operators into play. For the moment, some of the regulars have been appearing at major Qld markets without being active. But it may not be long before they do step in if Monday's Wagga market is a guide. Quoted at 492c/kg (CW equivalent), for the better end of the heavy cows, there would seem to be enough differential to pay the transport cost.
Overseas, regular US-based commentator Steiner Consulting has offered an interesting take on the Chinese lifting of suspensions on five Australian plants.
Referring to the May 14 application of tariffs by the US on Chinese electric vehicles and a range of other goods, Steiner believes the lifting of the Australian suspensions and a ractopamine detection leading to delisting of a JBS plant in the US happened too close to the US tariff action to be a coincidence.
In underlined bold type, Steiner said, "We do not believe in coincidences, especially when it comes to Chinese trade decisions."
His argument is that China has acted in this way to steer its purchases of grain-fed beef away from the US toward Australia.
A major Australian processor was not inclined toward the Steiner theory, noting that when he was in China in April, the lifting of suspensions was being talked about then, well before the US tariff issue.
Meanwhile, Australian 90 and 85CL trim prices to the US continue to ease by US1-4c/lb while US domestic 90CL boneless has improved to a new record high of US357c/lb.
