LATEST livestock slaughter data for the month of February has just been released by ABS but contrary to expectation, it does not show a pronounced dip in female slaughter percentage indicative of herd rebuild getting under way.
Female percentage in January was a high 52.7 per cent but this was expected given the carryover of dry conditions from the end of 2019 and accompanying heavy forward bookings of female cattle that were made before the Christmas close down.
As the good rain started in mid-January and continued through February, livestock buyers' phones were kept busy with cancellations of breeder-type cattle that had reluctantly been booked for slaughter.
Accordingly, the ABS figure of 51.9pc female slaughter in February looks surprisingly high.
That is until market forces are taken into consideration.
By early February the wet weather had pushed rates in south-east Queensland saleyards up into the 320c/kg range for cows, equivalent to well over 600c/kg dressed weight. Rates in southern centres were not far behind.
That would have been a powerful incentive for producers able to move cattle to clear out any empties earmarked to go and the saleyards, particularly in the south, were hit with big numbers.
Meatworks responded with rises in grid rates to around 560c/kg in mid-February and a peak of around 570c in the first week of March.
Any available cows in feedlots would also have been called up at this time.
Once it rained, the supply of cows was always going to fall but the sheer pulling power of money, it seems, has buffered that supply drop.
The resultant effect will likely be a gradual descent in female slaughter percentage from the low 50s into the high/mid 40s.
How long that takes will depend on how many cattle have been attracted out by the grid money on offer and how many kill weeks that number represents.
Judging from the fact that as of Monday this week, the south-east Queensland cow grid price has dropped to 470c/kg, it may be that a few cows have been signed up and will progressively come out of the woodwork in the weeks ahead.
But it may also be a fact that the drop in price is more a reflection of just how difficult it is at present to sell meat on world markets.
Once it rained, the supply of cows was always going to fall but the sheer pulling power of money, it seems, has buffered that supply drop.
Whatever the complexities of the current situation, there would seem no doubt that we are headed toward a rebuild of herd numbers or at least a period of transition where liquidation has been arrested as occurred in 2017 after the wet winter of the year before.
Then we saw the female kill generally in a range of 45-48pc compared to the big rebuild years of 2011-2012 when it was just 43pc.
Season, as always, will be the key.
Holding the line
AGAINST the odds, Australia is keeping coronavirus out of its plants, processing to the limit of available cattle supply and maintaining a very creditable level of beef exports.
On progressive Department of Agriculture figures thus far, anticipated result for the month of April will be around 92,000 tonnes, little different to February and March.
Somewhat surprisingly, that will place cumulative tonnage across all markets for the first four months of this year at just 1.5pc behind same period last year.
However there is considerable variation around this figure on a destination country-by-country basis depending on impact of the virus.
Standout for the wrong reason is the United States which will be around 14pc lower than same period last year when the cumulative figures to end of April are finalised.
March was well down by 30pc on 2019 and April will follow trend at around 25pc lower.
In their latest offering, Steiner Consulting talks about the US market for imported beef being driven by extreme fear of collapse in foodservice demand.
They spoke of some large grinding operators reducing operations or even closing for a period of time.
But the gloom now seems to be lifting in recognition of the fact that fast-food business in the US has not gone to zero.
Survey data suggests sales are down by 15-55pc depending on the nature of individual businesses.
The difference it seems is drive-through; those with it are doing much better than those without.
In consequence, Steiner believes inventory positions may have improved to the point that grinders are once again looking to source product albeit in limited quantity.
Another factor that holds some hope for improvement in the price of imported lean beef is the wide price spread that has emerged between imported and domestic product.
Indicator 90CL Aust/NZ blended cow FOB US East Coast is currently quoted at US$208/cwt (hundredweight) while 90CL domestic boneless is quoted at US$240.
Strong demand for ground beef at retail level in the US has driven up the price of domestic lean and Steiner thinks this could have some influence on imported product once stay-at-home rules begin to be relaxed and drive-through traffic continues to improve.
North-south differential
WITH winter approaching, supply of slaughter stock in the southernmost parts is noticeably tightening and once again a substantial price differential between north and south is opening up.
After adjustments made since last Tuesday, south-east Qld grids have 4-tooth ox at 550c/kg and heavy cow at 470.
North to south there is little difference on ox but southern grids are 20c ahead on cows at 490c.
In the saleyards the difference is more pronounced.
Heavyweight cows at Wagga on Monday reached 303c/kg to average 296.
This was a similar result to Wodonga last Wednesday where heavyweights sold to 308 for a 295c average.
In contrast, heavyweight cows at Dalby last Wednesday topped at 283 to average 262c.
Thirty-plus cents would normally encourage southern operators to look north but price alone is not the key; they also need numbers.
On that score considering major Qld works are still losing time, it is a fair bet they are just not there.
