Beef exports down as southerners seek kill stock in northern markets

Both May and June had shown a little bit of spark with volumes for both months just nudging 80,000t.

July kill slots filled quickly and rates started to come off which suggested something of a pipeline but as has been the case all year, weather and staffing issues continued to make life difficult for processors.

Rain early in July caused some lost time at central and north Queensland sheds and while not as heavy, late-month weather in the Burnett region caused some disruption to the flow of stock.

Processors also reported absenteeism due to COVID and influenza had hit certain locations very hard during the month. July also had one less regular working day than both May and June.

Looking forward, August has 23 regular working days and September has 22 and with the current COVID wave now supposedly in decline, there should hopefully be some scope to step up production and export volume.

But the cattle have to come from somewhere and as is so often the case at this time of year there are few to choose from in southern parts of the country.

According to MLA reports, there were only 150 cows at Wodonga last week and two decks at Pakenham on Monday spiking prices to 412c/kg.

Little wonder that southern buyers have been attending the major Queensland markets now for several weeks.

Their attendance has kicked rates and encouraged a few extra cattle to come out of the woodwork with Roma offering more than 500 meatworks cows last Tuesday and Dalby chiming in with around 450 on Wednesday.

This saleyard rally in combination with more unseasonal rain quickly steadied the downward trend in Qld grid rates and in the case of one major exporter turned things around by as much as 30c/kg DW.

Having what looked to be a comfortable position for August at the beginning of the month has now transitioned to only just having August covered.

With official forecasts talking about a wet spring and the prospect of further flooding, the question now is how supply will play out for the remainder of the year.

In non-drought years Qld processors often look to the south to supplement cattle supply in the final quarter.

The head start the south has generally had in season recovery since the dry years of 2018 and 2019 suggests their herd rebuilding should be well advanced to the point that breeder numbers have now stabilised around whatever business plan model has been adopted going forward.

The success of grassfed brand programs in the south and the current high prices for weaners and feeders would suggest there are unlikely to be many non-program grassfed bullocks around this year.

However to the extent that generic grassfed bullocks may have given way to a weaner or feeder turnoff model suggests the probability of higher breeder numbers in herds and correspondingly higher numbers of culls to go to meatworks.

That may start to become evident in the early months of 2023.

In the north meanwhile the rebuild process has a way to go particularly in the central west so there is a limit to what can be expected to come forward from that region in the immediate future.

To reach 900,000t of beef exports for the year, the remaining five months need to average more than 85,000t per month. That figure has not been reached since December 2020 and represents a 10,000t increase on the July result.

All major markets would need to share in a step up of such magnitude but the July figures suggest some frailty in the current market environment.

Japan, our largest market, remains under intense competitive pressure from the United States.

July's volume of 18,551t was down 4000t on June and a further 3000t down on May.

However second largest market, Korea, recorded its highest volume from Australia since December last year at 15,012t, an increase of 1000t on June.

China dropped 1400t in July to 12,533t at the same time that Brazil's exports to China were 22per cent higher than year ago levels.

The US recorded a modest 900t increase in volume, enough to make it the largest monthly tonnage this year but historically a low number at 11,757t.

THE phones have gone quiet, the saleyards are quiet and there is nothing in the south.

As one processor who has been around long enough to know said of the current state of play, "It is the old August syndrome."

Last week due largely to the presence of southern operators in the market his Qld grid rates took a 30c/kg turnaround.

A further adjustment this week puts his heavy cow quote at 650c/kg and 690 for 4-tooth ox.

Meanwhile Steiner had little in the way of good news this week on the US imported beef market.

With US cow and bull slaughter remaining at an elevated level, domestic supply of lean beef is assured in the immediate term and buyers are focusing instead on inventory of product in hand as demand tapers with slowdown of the grilling season.

The point was also made that just because the US beef cow herd has fallen to a lower level it does not necessarily mean fewer cull cows available for slaughter in the autumn months ahead.

Pasture conditions in the Southern Plains are the worst in over a decade and USDA predicts hay production will be well down, particularly in Texas the biggest hay producing state.

Lack of feed for winter could see producers continuing to liquidate cow herds in the months ahead.

Indicator 90CL imported beef ended the week at US265c/lb FOB East Coast and is trading at least at US3c/lb discount to domestic 90CL.