WITH a 16 per cent drop in forecast cattle slaughter numbers for 2016 on the horizon, and early year kill figures already significantly back year-on-year, the question of how the Eastern Seaboard’s processing structure will look in six to 12 months time is looming.
Processors have been tight-lipped about where they see the opportunities existing given lower throughput and what the decline is going to mean for longer-term processing capacity, although several did make the comment that ‘something will have to give’.
Meat and Livestock Australia’s Eastern State Slaughter Indicator shows 92,000 head were processed across the country last week, back 25 per cent year-on-year.
In NSW, 28,000 head were processed, down 17pc year and in Queensland just 26,000, down 36pc year-on-year.
Major players in Queensland have taken longer breaks than usual over the traditional Christmas maintenance period and while January is always a quiet month, those drops are still noteworthy, industry leaders said.
Following three years of record kills, Meat and Livestock Australia predicts the shortage of cattle in 2016 will lead to a 16pc decline in slaughter numbers to 7.6 million head, but its Manager of Market Information Ben Thomas said that was still in line with the ten year average.
Once the adjustment happens, it will likely be a similar scene to the late 2000s, he said.
Given the hot start-of-year cattle prices, producers are naturally wondering whether the sellers of Australian beef are going to be able to command the prices necessary to make the game sustainable.
The benchmark of Australian cattle prices, the rolling Eastern Young Cattle Indicator (EYCI), yesterday hit 600 cents per kilogram for the first time on record.
Good rain in patches across Queensland and NSW appears to have fuelled a greater-than-expected retention of stock and fierce competition for what is on the market.
Markets that had particularly large price jumps were IRLX Inverell, where EYCI-eligible cattle lifted nearly 60c from the week before, and Roma, where the first sale for the year on Tuesday had EYCI-eligible cattle up 191c from the first sale of 2015.
Dalby and Singleton were also strong.
The expectation now, Mr Thomas said, was that cattle availability would remain tight for January, and thereafter would depend on the timeliness of follow-up rainfall.
Managing Director of award-winning livestock producing, processing, marketing and retail outfit Atron Enterprises, David Larkin, said the world had taken enormous amounts of beef and it was going to be hard to sell at boosted prices.
Those who had invested in the supply chain and brands would be best placed to secure a premium, he said, but 2016 was shaping up to be tough.
There was no future for anyone in boom and bust so it was high time the conversation was had about how Australia could set itself on the path to constant supply, he said.
“At these prices, someone somewhere in the supply chain is not making money,” he said.
“The conversation about what parts of Australia can do what needs to start - where we should be fattening, breeding, carrying big numbers.
“Droughts, floods and bushfires are all facts of producing beef in Australia so we need to start managing the facts, not the accidents, to get away from the boom, bust cycle that provides no future for anyone.”
