Cost of cattle bites hard into processor margins
Shan Goodwin, North Queensland Register (AU)
13 Nov 2020
THE high cost of cattle and extreme shortage is pushing processors into a corner of struggling to maintain minimum weekly kill numbers, prompting talk that Christmas shutdowns might run longer this year.
Compounding the situation are challenges like export logistical hurdles due to the pandemic, intense labour shortages and uncertainty around ongoing demand in key markets.
The squeeze on margins this year was always anticipated but some analysts now put losses per animal in record territory, at close to $300 a head.
Still, beef processing is not an activity that can be switched on and off easily so many facilities have continued to offer red hot direct consignment prices to retain throughput.
Meat & Livestock Australia analysts report the Queensland 100 day grainfed steer over-the-hook Indicator moved into record territory this week at 681 cents per kilogram carcase weight, a 72c spike on year-ago levels.
In NSW, the trade steer, heavy steer and medium cow over-the-hook indicators hit records and in Victoria, the medium cow jumped 63c to hit a record high.
While normal seasonal shutdowns that align with saleyard breaks occur over Christmas, there were a number of key aspects plants would have to factor into decisions this year, Australian Meat Industry Council chief executive officer Patrick Hutchinson said...
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