A lull in live export buying activity as the trade awaits a new round of import permits from Indonesia has seen live export prices fall away in recent weeks.

As our weekly live export steer price graph on our home page shows, compiled in consultation with industry stakeholders with production, export and import activities, reported quotes for live export steers landed in Darwin have dropped away from 385c/kg live weight in late February to 330c/kg now.

A number of factors have contributed to the decline including the high Australian dollar, Indonesian importers struggling to shift cattle at the previous high price and also reduced slaughter and saleyard prices.

At the same time the beef supply equation for Indonesia also appears to have improved at this point in time.

First round mustering in northern Australia, and a dry end to the wet season, has pushed a wave of new season cattle supply toward the market, while the Indonesian consumer market is reportedly being impacted by larger supplies of cheap smuggled Indian beef as well as discounted imported Australian secondary cuts of boxed beef (as explained by our South East Asian correspondent Dr Ross Ainsworth in his most recent Beef Central column)

With buying to fill first-trimester permits finished, and few if any exporters buying as they await confirmation of the size and date-of-release of second-trimester (May-August) permits, it is difficult to establish a firm and clear price for Indonesian steers right at this point.

Based on the current lull in prices, some sources have told us they believe prices in the NT would actually be well lower than the 330c/kg we have quoted at this point, pointing to the lower rates now reportedly being paid in Townsville.

Feeder steer prices ex-Townsville are being quoted in a range varying from 250c/kg to 285c/kg.

The rule of thumb to establish the Darwin price is to add 25-30c/kg transport costs to the Townsville feed steer price, which would right now puts the Darwin price someway below our current quoted rate of 330c.

Price pressure on exporters

As one well-respected source noted, cattle leaving on ships to Indonesia right now would owe buyers anywhere between $3.85/kg and $3.30/kg.

With exporters and importers feeling the pressure of high cattle purchase costs the current market is certainly being talked down.

The question of where prices will move next is set to hinge largely on when the Indonesian Government issues permits for the next four month ‘trimester’, and how many head they include in the permits.

Australian industry and Government representatives have repeatedly urged the Indonesian Government to release permits well head of each trimester, and ideally at the start of each full year period, to enable forward planning and to reduce supply chain costs, which in turn should equate to lower beef prices for Indonesian consumers.

However, following those seemingly positive discussions involving then trade minister Andrew Robb late last year, the Indonesian Government still delayed the release of import first trimester permits until well after the trimester started.

There are few indications the Indonesian Government will be in any rush to release permits for the second trimester as well.

Beef Central understands that the Indonesian cattle importers association members have collectively applied for import permits for grand total of 500,000 cattle for the second Trimester.

The Indonesian Government was due to have an inter-department meeting last week to discuss their request.

However that meeting was postponed for a fortnight to accommodate a visit to Europe by the Economic Coordinating Minister with the Indonesian president Joko Widodo.

That puts the meeting back until next week at the earliest, which suggests the release of second trimester permits again may not occur until the period has already started.

While prices have clearly come back, even at the lowest quotes level we have heard of 250c/kg ex Townsville, rates on offer are still well above the 210c/kg for feeder steers and 185c/kg for heifers being offered in May last year.

Producer mood still largely positive

Despite the current lull in orders and recent easing in prices, the mood among northern cattle producers appears to remain relatively upbeat.

Northern Territory Cattlemen’s’ Association chief executive officer Tracey Hayes said stock camps were now out for first round musters and husbandry procedures such as weaning were in full swing.

A fairly patchy wet season meant large areas were drier then they typically would be at this time of year, meaning more properties had been able to get an earlier start to mustering.

“So there may be more cattle moving to market,” she said.

Adding an element of diversity to the northern mustering season is the fact that participants in NTCA’s two flagship initiatives – the indigenous employment program and the Australia Indonesian pastoral student exchange program – are now embedded in camps across the region.

“With the indigenous employment program we have 20 young people out on the ground now who have been trained and are out in jobs, and 20 Indonesian guys and girls are also out on the ground as of this week, so we are getting that fabulous diversity in the work crews,” Ms Hayes said.