Live export prices have kicked in response to Indonesia’s release of fourth quarter cattle permits for 200,000 cattle, with reports of some contracts now being written at prices as high as $3.06/kg in Townsville and $3.40/kg in Darwin.
While there have been reports of individual exporters paying to those levels in some circumstances, the bulk of sales still appear to be occurring between the 295c/kg to 325c/kg range ex Darwin, and $2.90-$3/kg range ex Townsville.
Export sources have told Beef Central that a rediversion of shipping capacity from Vietnam back to Indonesia for the start of the fourth quarter has created a short-term spike in demand.
The Indonesian Government’s decision to release permits for just 50,000 cattle in the third quarter, at the height of the northern cattle seasonal supply cycle, saw large numbers of ships and cattle previously destined for Indonesia rediverted to Vietnam.
That in turn has created a short-term oversupply in Vietnamese feedlots, with an estimated 100,000 cattle now on hand in the country.
This has in effect allowed shipping to return in force to the Australia-Indonesian run for the start of fourth quarter. Exporters with greater capacity are subsequently having to move cattle even though the sums are not in their favour.
After missing the opportunity to restock during the peak dry season turnoff cycle in the third quarter, Indonesia is now hoping to receive 200,000 cattle in the final three months of the year, when cattle are now in scarce supply, many having been rediverted to other markets, both within Australia and alternative live export destinations.
It seems likely that importers will struggle to fill their entire import permit allocations for the fourth quarter, and it is hard to see the supply outlook improving for the first quarter of 2016.
At the same time there is also talk within Australia’s northern cattle industry that Cambodia is on the cusp of placing new import orders for Australian cattle, which will add further pressure to an already pressured supply outlook.
As Beef Central reported earlier this week, the market was set alight last Friday by the sale of 900 quality Brahman steers averaging 335kg from Hayfield Station south of Katherine, NT, which sold via AuctionsPlus to a Darwin live export buyer for 330.4c/kg liveweight on station.
Adding 11c/kg freight to Darwin port values the steers, landed, at 341c/kg – easily an all-time record price for Indo boat cattle out of Darwin.
The escalating prices will present a challenge for exporters and their feedlot customers in Asia, as meat prices in Indonesia and Vietnam have not risen in line with the increasing purchase cost of cattle in northern Australia.
The higher prices are being driven by the strong demand for cattle from Asia versus the increasingly tight supply of cattle across northern Australia. Regions of Queensland that usually supply ships out of Darwin are dry and out of cattle.
Another unseen factor that also and always contributes to the volatility of export cattle prices is the affect that the Australian dollar has on negotiated deals.
In the past fortnight the Australian dollar has risen by almost 5c relative the US dollar, from 68.9c to 73.5.
One exporter said a 1c rise in the $A versus the $US can equate to 5c/kg liveweight difference in the effective cost of cattle for buyers.
Exports from Port Alma?
There has been more talk again about the possibility of live cattle exports commencing from Port Alma near Rockhampton.
Locally based Queensland LNP Senator Matt Canavan put a motion to the Senate yesterday asking for it to note the approval of Port Alma as a live cattle export facility and the benefit of providing new export options to producers and the cattle industry in Central Queensland, which the Senate passed in a vote 45 in favour to 10 against.
Beef Central understands that certified approval for live stock exports for Port Alma has been in place for several months, but what is now required for exports to commence from the CQ port is for an exporter to see greater commercial value in exporting cattle from the port as opposed to a more traditional port, such as Townsville.
Senator Canavan said CQ producers would benefit from better returns if live cattle exports from the port went ahead.
“Around a quarter of all the cattle exported from Townsville come from Central Queensland and producers bear the costs of trucking them north. Port Alma gives them a much closer facility with much lower transport costs.”
Senator Canavan said Port Alma was “set to go” for local live cattle exports.
“The facility at Port Alma was approved by the Department of Agriculture earlier this year and is currently registered to export live cattle.
“Everything is in place for exports out of Port Alma and, as I understand it from local producers, the only thing holding it up now is the high prices being paid for cattle on competing local markets, which is great news for the industry.
“Port Alma is an excellent alternative export facility for CQ cattle as and when it’s needed.”