JUNE figures released by Department of Agriculture confirmed at least a 10-year low point for half-year beef exports with volume failing to reach 400,000 tonnes.
Weather, labour shortages driven by COVID and influenza, shipping and market issues have come together in a way that was unimaginable to plague the processing sector this year.
The six-month total amounted to just 398,475t, a far cry from the 553,000t seen in same period 2020 and the 646,000t high-point in 2015.
The obvious question this raises is what the second half holds in store.
Meat & Livestock Australia invests considerable time and effort in its industry projections and its latest update released in June is relatively upbeat.
Its beef export forecast for the 2022 year has been revised down from earlier estimates but still stands at 940,000t.
If that is to be achieved the second half will have to yield 540,000t or an average monthly volume of around 90,000t.
That might seem a stretch as there were only two months in the first half of this year where export volume got close to 80,000t.
The last time we saw 90,000t/month achieved was in 2020. Carry-over cow liquidation from 2019 saw five months of elevated slaughter in the first half of 2020 but hasn't been seen since.
Drought-breaking rains which commenced in late January 2020 led to the start of a rebuild phase around mid-year and monthly beef exports since then have generally been in the 70,000t range with only odd months getting into the 80s.
Two-and-a-half years of rebuild suggests there should be more cattle becoming available for slaughter but that sentiment also needs to be considered against where overall herd numbers were when the rebuild started.
Since the 2010-2012 rebuild there have been four massive years of liquidation (2014-2015 and 2018-2019) and something of a false-start rebuild in 2016-2017.
Accordingly there is a view that the current rebuild phase was off a much lower base-herd number than was the case in 2010.
That may explain why processors spoken to recently are hopeful that the current run of slaughter cattle may extend beyond August/September but at the same time have some doubts that it may not quite have the legs.
But even if supply does maintain some momentum there is the issue of getting them killed.
With Omicron BA.4 and BA.5 subvariants now circulating widely in Australia, evidence from overseas leaves little doubt that a surge in COVID-19 cases is imminent. Health officials expect this current wave will likely peak in August.
This coupled with the influenza that is also circulating will mean ongoing challenges in the labour department. Avoiding lost days will be one thing let alone rebuilding depleted throughput numbers per shift.
The end result may be no real gains to be seen in throughput and beef export volumes in the second half.
The risk of course for producers in all of this is the effect on price.
Already we are seeing space bookings without an agreed rate as processors review their grids two and sometimes three times per week.
Contributing to this are market difficulties facing exporters in both the higher quality end and the lean-trim segments of the export trade as well as the domestic market at home.
The United States continues to place large volumes of fed-beef in both the Japanese and Korean markets while drought-induced liquidation of their cow herd is maintaining higher than normal supply of domestic lean beef which in turn is affecting demand for imported lean.
This does not automatically mean a drop off in volumes to those markets as evidenced in the June figures. Rather it means that exporters generally have to take lower prices for the product they have to place.
High occupancy level of expensive cattle in Australian feedlots on one hand and downward price pressure in key markets on the other had one processor recently describe the end result as a bloodbath.
As the figures show, Australia's exports to Japan in June were 22,508t. While down 3000t on May, this was the second highest month for this year and higher than all but one month in 2021.
Korea meanwhile saw its biggest monthly intake for the year at 14,067t.
Exports to China in June were virtually identical to May at 13,956 which on half-year basis keeps China as Australia's second largest market on volume behind Japan.
Similarly June exports to the US were identical to May at 10,888t. This puts the half-year result for the US at just 58,760t.
Contrast this to September 2014 when the volume to the US for that one month was over 47,000t.
SINCE late June, grid rates have come off 50-80c/kg bringing 4-tooth ox this week to 700/725 and heavy cow to 655/665c/kg. However not all works are actively quoting at the moment.
Strong headwinds persist in all segments of the export trade and similarly difficult conditions are being experienced at domestic level.
Accordingly with a cattle pipeline now extending well out into August, space bookings only are being accepted at some locations while rates undergo regular review.
Back in early March ox/cow grid rates in southern Queensland peaked at 835/775c/kg respectively which means a 110-135c drop to date equating to around $500 for a bullock and $400 for a cow.
Overseas, Steiner's report this week features a graph tracking US domestic 90CL against imported 90CL which shows for the first time since last July the two products at par.
As one processor contact said this week the drought conditions we experienced in 2019 are now being felt in the US. Continuation of hot, dry days is decimating what feed remains and there are reports of places running out of water.
This is causing high rates of domestic cow slaughter and the coupling of this with large freezer inventories is driving down demand and price for imported lean.
Indicator 90CL ended the week at US272c/lb FOB East Coast.
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