Cattle shipments from Darwin are returning to larger volumes after slumping to one of the slowest periods of export activity since the mid-2011 live export ban.
Only 4500 cattle were exported from the Port of Darwin during September and just over 11,000 in October, due to permit complications in Indonesia and reduced orders from Vietnam.
However, most Indonesian customers now have third trimester permits in hand, triggering the the return of renewed shipping activity.
An anchor dropped on shipments to Indonesia at the start of September when the Indonesian Government flagged the introduction of a new rule obligating importers to import one breeding animal with every five head of feeder cattle.
The rule places significant pressure and cost on importers, who import cattle directly into feedlots, and do not have the large areas of grass needed to support breeding operations.
Importers were told they would not receive permits for feeder cattle unless they supported the policy.
After several weeks most Indonesian importers have now agreed to the new requirement, and will now face the task of having to find ways to manage the importation and placement of large numbers of breeding cattle.
On December 31, 2018, their collective imports for the previous two years will be audited, to check that they have imported at least one breeding animal for every five feeder cattle imported since September 2016.
Importers do not have to begin importing breeding cattle immediately, but, provided the current policy remains in place, in two years time will have to be able to demonstrate that breeding cattle have represented one sixth of their total import volumes when the day of accounting comes on December 31, 2018.
The agreement of most importers means feeder cattle shipments can now recommence.
Australia’s northern cattle trade now anticipates orders will be received for between 120,000 to 150,000 cattle between now and December 31, 2016..
Northern Territory Livestock Exporters Association chief executive officer Stuart Kemp told Beef Central this week that exporters should be able to find enough cattle to supply that volume of orders in the next two months.
“120,000 to 150,000 will marry up with available numbers given current competition from restockers and opportunities to send cattle to the meatworks,” Mr Kemp said.
“Available numbers of cattle are still quite tight, and that is holding the price up at a dangerous level where it is very hard to write business without copping a big loss.”
Mr Kemp said many exporters have pre-bought cattle, some of which have been stored on flood plains and are now being accessed to supply Indonesian orders.
“There are still a few buyers active in the market looking for cattle and they will have to pay a wet season premium,” he said.
“You know that in the wet season you have to pay a premium as limited numbers and poor access impact price and unfortunately that continues to be the case even off a fairly high base.”
Mr Kemp said shipping numbers servicing northern cattle trade dropped back significantly this year due to the tight cattle supplies and high cattle prices.
He estimates there are only about 9 ships held by exporters on full-time charter now, compared to about 18 ships at the start of the year.
‘We knew that by about now we were going to lose a lot of ships, and that has been happening.
High prices and ongoing market uncertainty has made the decision to reduce shipping commitments a common move, he said.
“They would rather write no business than bad business.”
Export cattle quotes are currently sitting at around 335c/kg liveweight in Townsville and 365c/kg in Darwin, sources close to the trade have told Beef Central this week.