SLAUGHTER levels remained elevated throughout June taking monthly beef exports for the second time this year to over 100,000 tonnes.
Latest figures from DAWR (Department of Agriculture and Water Resources) put the June tonnage at 101,171, a level last seen for that month in the drought liquidation years of 2014-2015.
Regrettably it is once again liquidation of females that is driving the big kills of the last three months and all the eastern seaboard states are contributing.
A month or two ago a contact source in Victoria spoke of producers there cutting into PTIC breeders to lighten off and last week we heard that since mustering began in Queensland’s Blackall district most of those feeling the pinch have done three rounds cutting into any cows that are saleable.
Latest figures from ABS (Australian Bureau of Statistics) for May show that the proportion of females in the national kill has now spiked up to 53.2pc.
This is significant because in 2014 at the peak of the last major liquidation event, the average for the year was 50.6pc and for the month of May it was 52pc.
Overall in 2014 total monthly kills and numbers of females were higher than is the case now but proportionally the herd is being liquidated at a higher rate now than was the case in 2014.
But the big difference between now and then is the likely duration of the current event.
With good rain in Victoria and parts of New South Wales, the pressure will ease in those areas and that should see the number of females coming forward start to fall.
That will put the current liquidation phase at around four months compared to four years between 2013 and 2016.
While it remains to be seen how the second half of this year plays out, the first half has cranked out a lot of extra beef compared to same period 2017.
DAWR puts the progressive tonnage to June 30 at 536,000t compared 473,000t last year.
That is a gain of 63,000t or a little over 13pc but the really interesting part is where that meat is going to.
Japan, as Australia’s largest export market, is a strong performer with almost 29,000t in June taking their progressive for the half-year to more than 154,000t. That amounts to an increase of 15,000t or almost 11pc up on same period 2017.
In consequence it is looking very much as though Japan will now break the 300,000t mark for the full year which would be a significant milestone as it was 2012 when such volume was last recorded.
Second largest market the United States is a very different matter.
Recent demand for imported beef has trended down as their herd-rebuilding phase approaches its peak and greater volumes of domestic beef have become available.
Last year they took 234,000t of Australian beef compared to 416,000t just two years earlier when their herd was at a low level after a prolonged period of drought-induced liquidation and females were held back from slaughter as herd rebuilding got under way.
For the last two months Australian exports have been steady at 22,000t and at the half-year mark the progressive is only marginally different to same period last year.
Like Japan, the Korean market is experiencing good growth at around 11pc but that is on a relatively modest previous-year result.
Tonnage in 2017 was the lowest in the past four years and continued growth at current level will likely put the 2018 full-year result up into the 160,000t range.
Progress beyond that is problematic because of the adverse safeguard and tariff snapback provision under the Korea-Australia Free Trade Agreement relative to the position of major competitor the United States.
The US safeguard in 2018 is 306,000t while Australia’s is just 167,327t and the US enjoys a 5.3pc tariff advantage over Australia as well.
Not surprisingly the US is doing very well in the Korean market at present with latest trade data showing they exported almost 20,000t there in May, a 50pc increase on year ago levels.
But as important as those key markets remain to Australia, the runaway performer this year is China.
The last two months have seen tonnage at or in excess of 15,000, volumes that were last seen in 2013, the year of extraordinary growth in the Chinese market.
At the progressive half-year point, beef exports to China stand at 74,407t an increase of 23,000t or 45pc on same period 2017.
China is now poised to overtake Korea as Australia’s third largest market by volume.
Fat market dearer as supply steadies
MLA’s slaughter figures for last week showed Queensland held it numbers despite a major south-east works suffering some mechanical downtime but the southern states were back by 3pc which brought overall numbers down marginally to 143,572.
Considering the May/June peak of over 150,000 six weeks ago, the figures suggest the bull run since late April is now in decline and one major processor I spoke to earlier in the week thought it unlikely that Saturday kills will be on the agenda going forward.
More money went on the table this week bringing 4-tooth ox up to 490c/kg and heavy cow to 425 but it remains to be seen whether it will result in any more cattle coming forward.
On balance it looks as though it will be hard going for numbers through August and possibly into early spring.
But on the bright side there are reports of some pretty good oats crops from the Maranoa through Wandoan and Taroom and cattle just starting to go on now.
It will likely be October before they bob up but that at least holds some promise for a stronger run home in the final quarter.
Saleyards meanwhile are showing some hot rates on the back of disappearing numbers.
Heavy cows in Wagga on Monday averaged 237c/kg while bullocks at Leongatha climbed to 320c and averaged 314c.