Live Export

Livex market update: Trade volumes subdued despite lower prices

James Nason, 18/07/2023

Falling northern Australian feeder cattle prices usually prompt an increase in export cattle shipments to Indonesia, but that hasn’t really happened this year as demand side challenges subdue trade activity.

The Girolando Express loading in Darwin. Picture: NTLEA

Prices for northern export feeder steers have fallen more than 40 percent so far this year, from over $5/kg liveweight at Christmas to around $3.10 now (but with a fair spread – more on current pricing below)

However, rather than triggering more orders, the lower prices have been accompanied by a 35 percent drop in the number of head exported to Indonesia for the first half of this year – a total of 166,347 head – compared to the average for Jan-June over the previous five years of 237,146 head.

Department of Agriculture shipping data released this week shows that 52,043 cattle were exported from Australia in June.

That was marginally above June last year, when 43,474 were exported, but notably that was the month last year when imports to Indonesia began to slump following the detection of foot and mouth disease in the country.

The June data also brings to a close the 2022-23 financial year, with final figures showing 614,021 cattle were exported from Australia to all markets during the period.

That volume was just above 2021-2022, when 603,586 cattle were exported, but still 33 percent below the rolling average for the past five financial years of 928,691 head.

June also shows that 31,731 cattle were exported to Indonesia (21pc below the five-year average), 13,585 to Vietnam (25pc below the 5 yr av – but the largest monthly export to that market so far this year) and 4036 head to China (33pc below 5 yr av).

Just returned from Indonesia, CPC CEO Troy Setter commented that conditions in the market are “quite mixed”, with demand under pressure from a range of factors, but some opportunities also present.

A complex set of circumstances was dampening trade activity, with inflationary pressures causing consumers to reduce consumption of meat, while also adding to labour, feed and running costs for the feedlots which import Australian cattle.

Beef from Australian cattle currently in the market – some of which were bought when prices were still above $4/kg liveweight – is having to compete with strong continued competition from cheaper alternatives, including meat from local cattle which are still being panic sold due to foot and mouth and lumpy skin disease outbreaks, and Indian buffalo meat and boxed beef from various import sources including Brazil and Australia.

Something of a Mexican standoff has therefore developed at trade level in Australia, with many northern producers who are enjoying a good season and positive cash flow after recent high-priced years not inclined to take prices below $3 per kilogram, happy to hold and add weight, while at the same time importers are not prepared to buy if they cannot secure cattle at the price they want.

Where they are buying, importers are reportedly buying in smaller volumes than in the past – ordering 500 head as opposed to 1000 head, or 1500 head instead of 3000 head for example.

Picture: NLTEA

This is resulting in more mixed shipments being loaded in Australia for Indonesia, with each ship regularly containing multiple consignments from multiple exporters for multiple importers.

This is also increasing demand for the smaller ships as a result, leaving the bigger ships to keep busy servicing non-Australian routes, such as South America to Asia and Europe.

The availability of boats is also reportedly leading to a varied spread of prices for cattle currently walking onto ships, from the high 200c range when few boats are departing, while buyers needing cattle at a particular moment may have to pay well over the quoted 310c mark to coax them forward from northern producers in the current market environment.

Mr Setter said the recent rain in Queensland also appeared to have rejuvenated some interest from producers looking to buy northern breeders and restockers.

He said northern Australia is still relatively understocked for cattle, following the 2018-19 drought, the large numbers of shipper-ready feeder cattle that were bought by southern restockers and feedlots when seasonal conditions turned around in 2020, and the impact of heavy rain flooding earlier this year in the Kimberley.

 

 

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  1. Mario Aishemberg, 19/07/2023

    Excellent report

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