WHILE the early part of November was caught up in shortened supply of slaughter cattle due to the October rain, numbers returned by mid-November and beef exporters turned in a creditable 95,469 tonnes for the month.
According to Department of Agriculture and Water Resources this takes the 11-month progressive tally for the calendar year to 1.033 million tonnes which is up by 11pc on the same period last year.
With remaining shifts covered for numbers until season closure, December exports should comfortably take the result for the full year to around 1.12mt.
That will be a significant result as in recent times only the two big drought liquidation years of 2014 and 2015 saw bigger export tonnages.
Since then the national herd is thought to have undergone little in the way of rebuilding due to indifferent seasons in 2016 and 2017.
Therefore to pull such a big tonnage of beef out of the Australian herd before it has had time to recover from its drought-diminished state indicates that something exceptional has happened.
While it hasn’t attracted the attention that accompanied the 2014 liquidation year, it would seem 2018 in proportional terms has been just as big a liquidation year as 2014.
The difference, of course, is that 2014 started with a very big herd and the elevated supply exceeded slaughter capacity which dramatically dropped prices.
For the 2014 year, female cattle made up 50.6pc of total slaughter.
Strikingly, latest 2018 ABS figures show the 10-month average to end of October for female cattle at 50.9pc.
The contrasting factor however is the 2018 liquidation has not resulted in an excess-to-capacity situation and prices have remained strong.
To further illustrate the extent of liquidation in 2018 it is useful to extrapolate kill figures for the full year.
Best estimates place full-year kill at around 7.82m head with females accounting for around 3.96m.
That’s a total of around 660,000 more cattle in 2018 compared to 2017 but none of that is from male cattle.
In fact if the estimates prove accurate, male numbers will be down on 2017 which means all of the increase plus some is due to liquidation of females, around 700,000 head all up.
That represents a significant setback to rebuilding and in view of what passes as a season these days, an extra-long haul to get herd numbers back up.
The male slaughter-cattle story must also be cause for some contemplation among processor ranks. At 3.86m in 2016 it climbed to 3.9m in 2017 and looks like being back at 3.86m this year.
It must be of concern to some that this could be an indication of tightness ahead in supply of heavier, male cattle particularly in view of boat-trade competition from Vietnam and China.
Asian markets setting the pace
AUSTRALIA’S biggest export market, Japan, continues to lead the way with a thumping 29,107t shipped there in November.
That is 8pc up on October and the third biggest monthly tonnage for the year so far. It is also the highest third-quarter monthly tonnage in the past seven years.
The 11-month cumulative total to November now stands at 290,875t and trade for the full year looks set to push up to around 315,000t.
Last time Australia exported more than 300,000t to Japan was in 2012. Korea meanwhile is maintaining almost 15pc growth on last year with 14,831t shipped there in November.
Product shipped since October 11, when safeguard was triggered, will count against the 2019 safeguard volume but nominal tonnage shipped from Australia this calendar year will be up around 165-170,000t.
The safeguard was 167,327t in 2018 and resets on January 1 to 170,673t. Tariff drops from 26.6pc to 24pc in 2019 with a snapback to 30pc if safeguard is triggered. There are nine years to run under KAFTA before tariff and safeguard reduce to zero.
China meanwhile looks set establish a new record for Australian beef imports. Cumulative 11-month total for this year is already 146,697t and with monthly volumes steady at around 14-15,000t, a full-year total of around 160,000t appears certain.
In contrast the United States, which just three years ago took 416,000t of Australian product, is expected to record a similar result to last year’s 234,000t. November tonnage to the US fell to just 14,702 (almost identical to China) but lean grinding beef prices there are reported to be trending higher on the back of improving retail ground beef demand.
This may lead to some improvement in the US market in the New Year.
Last minute surge in kill
IT’S always good to end on a high note and that is exactly what happened with last week’s kill.
According to MLA the eastern states total rocketed to 147,531 head from the previous week’s 135,000.
Queensland was in the driver’s seat with a huge 7,600 head increase in females and an extra 4000 male cattle, all told a 19pc jump on the week before.
The difference in NSW numbers was less than 1000 head and fluctuation in the other southern states had no net impact.
For one major Queensland operator who had been losing time through the leaner months, the extra cattle meant a return to full shifts including Saturday.
The opportunity arose out of an abundance of southern cattle and a short time frame to do something with them before extreme heat made transport untenable.
Whether it added to the company’s bottom line is not known but in terms of putting some money in the pockets of the workers before Christmas it was an absolute winner.
With the extra cattle in the system rates came back another 10 cents across the board late last week.
Best indicators now on published and non-published grids in southern and central Queensland alike are 535c/kg for 4-tooth ox and 460 for heavy cow.
The 2018 year is expected to close out on these figures.
