Live-export geared cattle producers are facing an intense battle to secure export orders to Indonesia this year, with smaller-scale producers being urged to “get proactive” in their marketing now.

Indonesia remains the single most important and viable market for many live-export-geared enterprises, but has cut import quotas by half since 2011 as it strives to achieve self-sufficiency in beef production by 2014.

With the first-quarter quota of just 56,000 head now all but filled, attentions are turning to the second quarter quota of 117,000 cattle, which is higher as Indonesia prepares for the peak period of beef demand following Ramadan in mid-July.

The numbers are the smallest they have been in years, and the seasonal circumstances at play suggest there will be no shortage of in-spec cattle to fill remaining orders for the year.

Northern Australia is experiencing its driest wet season for at least three years, and, as conditions dry out, cattle are already starting to move.

Exporters are unlikely to see any need to rush into contracts at this point and will be factoring how supply pans out across a wide area of the north before setting prices.

They will also be keeping a close eye on cattle supply in Queensland, aware that there has been a significant build-up of numbers in recent years and that seasonal conditions have not been favourable.

Many producers in the western half of the state have missed the grass-growing rain they need to carry cattle with confidence through the forthcoming winter dry season, and will be counting on decent rain before mid-March at the latest to achieve that.  (Parts of the region have received falls of some magnitude in recent days and Beef Central will provide a comprehensive update on where the rain has fallen tomorrow).

Producers north of a line from Mount Isa to Townsville that don’t receive the rain they need by mid-March will be under pressure to turn-off cattle, which could see shipments from Karumba or Townsville emerging to compete with cattle exports from Darwin, Wyndham and Broome.

“The exporters will be keeping a very close eye on what the market is doing in Queensland,” one cattle industry source told Beef Central this week.

“They’re not going to rush out, they will use that basically as the benchmark for what they need to buy cattle landed here (Darwin).”

As recently as last month, when potential wet season disruptions to supply still loomed large, exporters were paying up to $2/kg liveweight to source cattle for first quarter Indonesian contracts.

However, with supply seemingly guaranteed, and dry conditions persisting, prices have reportedly slipped back to around $1.75/kg lw in recent weeks.

While prices have come back, the bigger problem for smaller-scale producers will be simply accessing orders.

As one producer explained, big companies are well-placed to tie up the lion’s share of contracts in the current environment, which will leave smaller producers to compete for the limited offerings that are left.

“The difficulty in this market is getting space on a boat,” the producer said. 

“If an exporter wants 3000 head of cattle he rings a company to ask if they can supply.

“It is one phone call, if they can supply 3000 head then that is that.

“If they can only supply 2000 head, then other guys like me might get a look in.

“You can’t blame them for doing it, it makes it easy.”

The key message for smaller producers, according to Northern Territory Livestock Exporters Association chief executive officer and former livestock agent, Bernie Brosnan, is to be proactive.

“Obviously the biggest thing for those producers that have the smaller numbers is that they need a very proactive agent, or if they deal direct, they need to be very proactive in the marketing of their livestock.

“They need to be planning well and truly a couple of months ahead to try to secure space.”

The three numbers of importance that remain for live-export focused producers this year are the final three quota figures– 117,000 head for the second quarter, and 46,000 head each for the third and fourth quarters.

That adds up to a total of 209,000 cattle left to be shipped this year.

The Port of Darwin typically ships 230,000 to 250,000 head a year on its own, but other ports such as Broome, Wyndham, Karumba and Townsville will also be vying for supply.

As occurred last year, the cattle that don’t make it to Indonesia, which are likely to be considerable,  will ultimately add to the supply mix available to the domestic feedlots or processors as grass finished cattle in one or two year’s time.