Huge lift in April beef exports

First quarter throughput and beef exports normally peak in March then ease back in April due to production losses from public holidays associated with Easter and Anzac Day.

This year, however, Easter was shared between March and April and coupled with the fall of the calendar, both months provided 20 regular working days.

This set the stage for the rare possibility of April exceeding March in production and exports, and it may have been only wet-weather production losses in April that prevented this from happening.

As it was, April shipped 105,367 tonnes across all destinations compared to 106,573t in March. Year-to-year, this compares to just 61,000t in 2022 and 72,000t in both 2021 and 2023. The last time April saw a bigger result was the drought runoff year of 2015.

At this early stage of the year, these March and April results are a very powerful indication of how well primed the slaughter-cattle supply pipeline is and foretells the likelihood of a continuation of big numbers throughout the year.

According to MLA's weekly slaughter figures, throughput reached 130,000 head by mid-February and went on to 136,000 in late March. Full-week figures for April were 131,000 and 134,000. MLA has always made it known that these figures understate the actual kill as provision of data is voluntary and some operators choose not to contribute.

But a couple of weeks ago, it emerged that this understatement may be considerably more than many people may have thought. It seems a comparative analysis of MLA and ABS slaughter figures since 2020 has identified a difference of 20pc.

Therefore, by applying the 20pc factor to MLA's figures, it suggests that actual slaughter is currently running at or better than 160,000 per week.

Having correct and timely figures on the number and composition of the kill is important.

From a supply perspective it provides guidance on where capacity is currently at and from a market perspective it provides guidance on production.

For example, in 2019 weekly kill across the whole year averaged 163,000 head. In May alone of that year 784,000 were killed which suggests high 170s or even into the 180s per week were being achieved then.

Given the rebuilding and refurbishment of plants in southern states and reintroduction of second shifts in Queensland, there would seem scope for capacity to continue to edge toward the sort of numbers achieved in 2019 as those plants and shifts come up to full production.

In drought liquidation years and even this current year where the extent of supply is not certain, having a good handle on where capacity is at would seem important.

Having the markets to absorb higher levels of production is another part of the equation.

In that regard the United States, by virtue of where it sits within its own cattle cycle, continues to increase its take of Australian product.

Since the beginning of the year, volumes have increased month on month. In the past 12 years April has never exceeded March volume but this year that changed. April's 27,257t was up marginally on March's 26,000t but also up dramatically on the previous year when only 12,000t were shipped.

In 2022, volume for the entire year to the US was just 133,000t but the turnaround, which began in mid-2023, now has the four-month year-to-date cumulative at 95,390t, up a whopping 88pc on previous year.

But while US cow and bull slaughter levels remain at 12-20pc below recent years, the price of US domestic lean has steadied.

Steiner notes a US1-3 cents a pound easing in imported lean beef price over the past couple of weeks because of US domestic lean coming off in price, but a more recent quote from an Australian exporter puts it at US10-15c/lb.

However, Steiner is not necessarily convinced that the US domestic rally in lean beef values has run out of steam.

The last time the US cycle was in a similar position was 2014. Then, as now, it took a pause in May before resuming its upward progression toward US380c/lb in today's dollar value.

In his latest report, Steiner notes that buyers planning for Q3 and beyond are willing to pay a premium over spot market to cover risk past three-month delivery.

In the Asian markets, Japan and Korea both recorded marginal increases in their April volumes over March.

Japan's 21,731t takes its cumulative for the year to 82,864t, up by 28pc on the previous year confirming its resurgence in interest for Australian product in response to diminishing US supply.

Korea's 15,785t in April was marginally up on both the previous month and year resulting in its year-to-date cumulative total of 56,281t holding within 1pc of 2023.

China's April volume of 14,888t was down on both the previous month and year but nevertheless kept its four-month cumulative volume marginally above 2023.

Steiner picked up on China's buying spree in the first three months this year noting that global beef imports were 22pc higher than a year ago.

Given the pace of imports will need to slow in order to draw down some of this accumulated inventory, the question raised is whether such slowdown in Chinese demand could result in more South American beef heading instead to the US.

PROCESSOR contacts commented on how quiet the phones have gone with Beef Week under way but they don't expect it will stay that way for long with the first frosts not far away.

The past four weeks have seen little or no change in grid rates in southern Qld with YP ox holding 520-525c/kg and heavy cow at 450c/kg.

While rates remain steady, processors are accommodating extra cattle. Townsville added a day to its schedule last week and Dinmore has moved up from 2400 to 2600 per day as the reintroduced second shift settles in. Teys' three northern plants are all doing additional shifts every second Saturday.

MLA data indicate cows are prominent in the kill, particularly in Victoria. National female slaughter rate (FSR) has been at 49pc since late March, rising from 43-46pc in the early weeks of that month. However, this is not out of the ordinary as FSR generally rises in Q2 and Q3 before returning to a lower level in Q4.