DESPITE some wet weather challenges, beef processors have concluded first quarter 2024 with strong growth in slaughterings resulting in a massive 25 per cent increase in export tonnage.
For the month of March, export volume rose to 106,573 tonnes across all destinations taking the cumulative total for the quarter to 275,992t, an increase of 55,000t on Q1 last year.
The last time Q1 was at this level was the drought runoff years of 2014-15. The difference between then and now is that Q1/2014 saw almost 2.2 million cattle slaughtered to achieve the same level of beef exports as Q1/2024 where the slaughter level is expected to be confirmed at around 1.8-1.9 million when the ABS figures come out next month.
Herd growth throughout 2020-2023 is underpinning current throughput and until such time as the cycle moves once again toward liquidation, average carcase weight will remain high.
In Q4/2014 average carcase weight was just 282kg whereas the latest figure we have is 313kg for Q4/2023.
The implication for throughput efficiency from a carcase weight difference of this magnitude is obvious.
Add to this the strong start to 2024 weekly slaughterings, which are evident in MLA's Q1 figures and which look set to continue at least on current levels throughout this year, it seems likely that Australia will be looking to place considerably more beef into world markets.
Between 2022 and 2023, slaughterings increased by 1.179 million head (ABS data) which equates to almost 23,000 head per week extra.
Q1 slaughter this year showed a further rise period-to-period of about 20,000 head per week but it may be unrealistic to expect that trend to continue at that level as the year progresses. The reason is that gains in processing capacity were made progressively throughout 2023 with the weekly-kill highpoint for the year reached in mid-November. While well above Q1/2023, Q1/2024 is only marginally above Q4/2023. In other words, the biggest part of recovery in capacity may have already been made in 2023 leaving only some further marginal gains to be realised in 2024.
In its February Industry Projections 2024 report, MLA forecast an extra 825,000 head in slaughterings this year. That is around 16,000 per week extra, a substantial ease back on the 23,000 per week gain achieved in 2023. That puts the MLA slaughter projection for 2024 at 7.85 million.
To push up to an arbitrary 8 million in slaughterings in 2024, average weekly kill would need to increase by an extra 19,000 head.
Historically that is within the realm of possibility as 2019 saw 8.48 million head slaughtered and over 9 million head killed in both 2015 and 2014.
The problem, of course, is that we don't really know the extent of the 2024 slaughter-cattle pipeline, and we no longer have pools of labour waiting at the front gates of abattoirs each morning.
Adding labour to man extra shifts now requires a significant lead time to recruit and train people so there has to be a high level of certainty that the cattle are going to be there.
This is a good reason why producers should support MLA's Beef Producer Intentions Survey initiative.
While the efforts of ABARES and ABS are appreciated, there has always been a need for better information on herd size and composition, heifer retention rates, turnoff intentions etc and BPIS is designed to help fill those gaps.
Looking at individual destinations for March's increased export volume, the United States was the standout with 26,484 tonnes. This is a 5000t increase on the previous month and 9000t better than the same time last year.
Decline in US domestic cow and bull slaughter continues with Steiner noting current level down by more than 22pc on two years ago.
There is also a significant drop off in import volume from Brazil now that available quota has been filled.
With domestic 90CL boneless already in record price territory, focus has shifted to 85CL with the result of a tighter spread between these products. The last report sighted had 85s within 5pc of 90s.
As well, domestic fat trim (50CL) prices have been tracking well below year-ago levels and continue to decline.
Steiner says this is encouraging beef patty manufacturers to look at the composition of their typical 75CL meatblock derived from fresh domestic 90s and 50s.
By replacing domestic 90s with imported frozen to the extent their specifications will allow, their 75CL meatblock price can be significantly reduced.
This is all helping to keep imported lean beef prices on a positive trend.
Japan meanwhile has taken the foot off the pedal and dropped 2800t on last month to record 21,007t for March, a similar amount to last year.
One major export processor who recently commented on Japan's renewed interest in Australian beef due to the US shortening up, was also inclined to the view that overall demand would remain relatively flat. His business supplied a certain amount there most weeks and that was pretty much it.
In other markets, Korea's 14,046t was up 1000t on the previous month, but 5000t down on last year. China, too, showed a small increase in its March tonnage of 16,484t, but a 3500t decrease on last year.
Indonesia recovered from its slow start to the year with 10,299t in March, but on a cumulative basis for Q1 trails last year by 15pc.
Rain lifts rates with minimal disruption
WITH the extent of rain and water coming down river systems in the west it seemed inevitable that there would be some disruption to kills this week but surprisingly the impact has been minimal.
Central and northern works are unaffected, leaving some plants in the south-east of the state to bear the brunt. But rather than have several days of reduced kills, one major plant elected to contain the losses in one dropped day keeping the rest of the week in full kill.
Adjustments made last week saw 10-20c/kg added to grids taking YP ox to 535-540c and heavy cow to 470c. The cattle pipeline is now reported to be a good three to four weeks in front in southern Qld and more in the central.
