US headed for back-to-back beef production records

This will mean even greater emphasis on achieving export growth for US product particularly into the higher-value destinations of Japan and Korea.

This is not great news for Australia.

With ramped up grain prices and roughage almost unprocurable, Australia’s feedlot sector has struggled through the highest cost structure ever faced to produce the high-quality product the processing sector needs to maintain its stake in these premium markets.

Now, facing uncertainty of season yet again and what that might mean for ration costs in 2019 together with a herd further diminished by a year of heavy liquidation and a shrinking pool of heavier feeder types, processors must be feeling more than a little uneasy about their prospects in the year ahead.

Dr Peel said total slaughter so far this year in the US is up by 2.7pc. Average carcase weight is also up by 2.3 pounds and the combination of these two has driven total production toward the expected record for 2018.

In a sign that the herd rebuilding phase in the US is maturing, heifer slaughter has moved up to 27.8pc so far this year from 27.2pc in 2017. As heifer retention rates slow, Peel expects the proportion of heifers in the kill will continue to creep up toward the long-term average of just under 30pc.

Similarly beef cow slaughter is up by 10.5pc year-on-year as culling returns to normal levels.

As heifer and cow slaughter rates return to normal, steer slaughter is expected to move closer to the long-term average of 50.6pc. It is presently around 51.6pc.

FOR those who have use for a brief potted summary of Australia’s key export markets and major competitors in the red-meat game, MLA (Meat & Livestock Australia) has obliged with the release on Monday this week of an update to its global market snapshots.

Last updated in February this year, the snapshots cover 10 key markets for beef and eight key markets for sheepmeat, including Australia, Japan, North America (US, Canada and Mexico), Korea, China, Indonesia, South-East Asia, European Union and the Middle East and North Africa (MENA) region.

MLA’s Market Intelligence Manager, Scott Tolmie, said the snapshots aim to not only provide information around what is driving export volumes and values, but also a more forward looking analysis of consumer and industry trends that will influence Australia’s future red meat exports into each market

One example deals with the key outcomes of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) which is currently stalled due to Indonesian sensitivity over the recent Australian government announcement about possible relocation of its embassy in Israel. Another briefly examines the increasing competitiveness of US beef in Japanese and Korean markets.

The individual snapshots can be found at http://www.mla.com.au/prices-markets/Trends-analysis/market-snapshots/.

ACCORDING to results of the latest ALFA (Australian Lot Feeders Association) and MLA feedlot survey for the July/September quarter, new records have been set for cattle on feed, licensed capacity and export volumes of grain-fed beef.

A 0.5pc increase on the June quarter took cattle on feed to 1.126 million head while licensed capacity increased by 8500 head to 1.309m head.

Driven principally by the ongoing drought in eastern states, these latest figures are testament to the important role feedlots now play in helping the grazing sector deal with the vagaries of season.

While margins would have been under intense pressure due to high feed prices, the upside was solid demand for grain fed beef product especially in key Asian markets.

MLA’s Scott Tolmie said that export volume of grain-fed beef in the September quarter jumped by 13pc on same period last year to a new record of 83,000 tonnes.

Japan was prominent with a 9pc increase year-on-year at 41,150t, Korea increased 6pc to 16,734t and China after a lengthy ‘go slow’ on this class of product lifted 184pc on year-ago levels to 13,768t, a new record.

THE long awaited final-quarter surge has finally appeared in the weekly slaughter numbers but with only one week of November and a couple in December left before end-of-year closures it will amount to little more than a blip on the chart.

One major processor I spoke to this week said weather and time of year were driving the extras. There was no specific region that stood out; rather they were coming from all over.

Across eastern states MLA reported a jump to 139,808 head, up by more than 9000 (7pc) on the previous week.

Queensland contributed the biggest part with a 4500 head (7pc) increase mostly in male cattle.

Victoria also stood out with a 3300 head (14pc) rise which took their tally for the week to 26,500 the biggest kill recorded so far this year.

In fact, it is the biggest Victorian kill in more than two-and-a-half years according to MLA figures.

New South Wales chipped in with an extra 1300 head (4pc) on the week prior.

While the rise in numbers looks substantial it is likely to have no effect on grid rates for what is left of the year.

Published and non-published grids remain unchanged this week at 550-555c/kg for 4-tooth ox and 475-480 for heavy cow and are consistent across southern and central Queensland.

In the saleyards, Dalby last week offered 300 heavy steers and bullocks which averaged around 309c/kg, pretty much on par with hooks rates.

Over 400 heavy cows averaged around 248c/kg which may have worked out to a shade over grid rates depending on dressing percentage.