Weekly slaughter: Big tax bills could slow June livestock supply

TAX issues for beef producers after a fiscal year of record cattle prices could contribute to slower marketing of slaughter and storage cattle in June, some beef processors anticipate.

Processors told Beef Central this morning that conversations with suppliers suggested tax management issues will enter the equation for some in 2022 – more than any other year in memory. The extra revenue generated by the end of the financial year would only add to an already considerable tax burden – and that could be quiet for in-store sales, as well as finished cattle.

“There will be a lot of cattle people looking at the tax implications and putting their tails in the rack,” a contact said.

After July 1, however, there could be a mini-uptick in the supply of store and slaughter inventory as trading begins in the new fiscal year and tax considerations diminish.

“Taxation is certainly not the only reason, but it will be a factor in an increase in July figures,” said a contact this morning.

Reports from export processors’ meat sales counters were mixed this morning. Large numbers of feeder cattle and processed cows in the United States are beginning to exert a greater influence on Australia’s position.

Lean ground meat imported into the United States is becoming a little harder to sell, while fattier descriptions in North Asian markets have held up better. Another growing concern is the abundance of grain-fed steer meat that is now deactivated in the United States, reflecting large inflows to feedlots four months ago as the US drought began to bite. . This US grain-fed beef is increasingly being shipped to Japan and Korea at very competitive prices, making life increasingly difficult for equivalent grain-fed Australian exporters. On some cuts, US-fed grains undercut the Australian equivalent by US$3-4/kg, Beef Central said.

“The sharp increase in US cattle in feed is starting to kick in now, at a knot rate,” an export trade contact said. This could potentially create a hole in the feeder cattle market in Australia in the coming months.

A number of beef factories in Queensland are still planning to skip a kill day this week as the country continues to dry out after rain, and it could be the same next week as the effect lingers . To make matters worse, more rain is forecast for parts of Queensland next week.

Processors are also reporting ongoing staff health issues this week – both the common flu and COVID – which still limits the ability to kill larger numbers.

Network deals continue their steady eight-week trend

Offers from direct consignment processors kept their cycle remarkably constant for another week this week. There has been little substantial change in network prices now since a 30c/kg reduction in typical prices in the run up to Easter – eight weeks ago.

With large influxes of grain-fed cattle now hitting the market, several large processors said they were reasonably well covered for the week beginning June 22. One operator said he was as advanced in procurement as his business had been in a very long time. Lower mortality rates, partly due to the staff health issues expressed above, were contributing to this.

In South Queensland the grids seen this morning have the best deals for grass fed heavy four prong steers at 775c/kg (780c in one case for without HGP, or 770c implanted) and 715-720c/kg for heavy slaughter cows. In the southern states, top heavy cows are earning 720 cents/kg this week, with four-tooth heavy steers around 790 cents – not far off Queensland rates.

Unusually for late May, no significant frosts have been reported in southern or central Queensland so far this year. A contact who has recorded the first annual frosts in the past three decades on the dunes, said 2007 was the last year a frost had not been seen in late May in his area – that was 15 years ago . Typically, frosts can be seen any time after ANZAC Day in the southern dunes.

A mild start to winter could see some grass growth after earlier rains in southern and central Queensland.

The number of slaughters increases

There has been a healthy increase in adult cattle slaughter across Australia in the past week as the industry recovers from wet weather and the earlier holiday period.

The numbers hit 97,089 nationwide – the second highest seven-day death toll on record this year, but still well behind the numbers typically seen at this time last year, and miles behind 2,020 deaths during the drought.

Queensland has seen a surge in activity, rising 13% the previous week to 49,963 head – the state’s biggest slaughter this year as the country begins to dry out after recent rains.

NSW was also up sharply, processing 25,682 head last week, up 17% but off a low base.

Further south, Victoria’s death toll last week rose slightly to 11,681 heads, while South Australia and Tasmania were little changed at 3,198 heads and 4,412 heads, respectively. Figures in Western Australia followed their normal winter seasonal pattern, continuing to fall to 2,153 head last week, down 17% from three weeks ago.

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