Live Export

Livex prices ease as supply outlook hinges on summer rain

James Nason, 17/01/2018

The amount of life left in a near two-year run of live export steer prices over 300c per kilogram liveweight (ex Darwin) could hinge on what rain falls in Queensland in the next month or so.

Rainfall patterns in the key supply state of Queensland have always been a large influencer of live export market rates.

With two-thirds of the State currently drought-declared, rainfall over the remaining six weeks of summer is likely to play a pivotal role in determining live export supply and price trends for 2018.

The Bureau of Meteorology’s January to March rainfall outlook released on December 21 offered some reason for hope for producers needing rain, with large parts of Queensland rated a 55-60 percent chance of receiving above average rain for the next three months.

“There a couple of things that will influence cattle prices and the main one is rain in Queensland,” one live exporter commented to Beef Central this week.

“If Queensland gets a big deluge the market will stay pretty firm, but if it doesn’t rain in Queensland for six weeks you are going to see a lot of cattle hit the market.”

On the demand side of the ledger there is considerable downward pressure on prices.

The Indonesian demand situation is “diabolical” in the words of one exporter, referring largely to the decline in beef consumption with a slow economy and the continued impact of Indian Buffalo Meat in the market, which will be exacerbated in 2018 after the Indonesian Government’s recently announced plans to import at least another 30,000t this year.

The uncertainty in Indonesia and similar subdued demand conditions in Australia’s the second largest market, Vietnam, are key factors behind the recent downward trend in prices now available for export steers in Darwin.

Rates have eased from around 340c/kg liveweight prior to Christmas to 320-325c/liveweight this week.

One order placed by an exporter for live export steers delivered to Cloncurry later this month has steers priced at 300c/kg. The freight differential of 15c per kilogram from Cloncurry to Darwin places that order at around 315c delivered Darwin.

The higher Australian dollar is also adding to pressure on Indonesian lot feeders by increasing the price they must pay to secure already high priced Australian cattle.

While the Indonesia Government is moving to diversify its beef supply sources away from Australia by importing Indian Buffalo Meat, Chinese demand for Australian cattle is growing. The first shipment of cattle from Northern Australia to China is leaving today, amid expectations that China may soon start importing more feeder cattle as well.




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