Live Export

Rising prices boosting northern confidence, but good wet still critical

James Nason, 30/09/2014

Rising cattle prices are helping to re-inject confidence into the northern cattle industry, but a good wet season is still needed for producers to mount a meaningful recovery.

Northern Territory Cattlemen’s Association chief executive officer Tracey Hayes has just returned from Indonesia where the Government last week formally released fourth-quarter import permits for a massive 250,000-265,000 cattle.

To put that volume in perspective, Indonesia has already imported more than 600,000 cattle this year, and the permits it has issued for the final quarter alone almost exceed the volume issued for the whole of 2012.

Overlaying an already restricted supply outlook is a growing belief that demand could soon increase even further if negotiations to open a live export trade from Australia to China soon bear fruit, as has been speculated.

At the NTCA annual general meeting in Darwin back in March, president David Warriner said producers needed prices of $3/kg liveweight to cover operating costs, invest in required capital improvements and to present investors in northern cattle operations with a competitive return on investment.

At the time feeder steers were priced at around $2.30/kg lw in Darwin, the strongest they had been since the June 2011 export ban but still well short of the $3/kg target.

Prices subsequently fell away in the middle of the year as the industry entered its main period of supply, but have since regained all of that ground and more as supplies have gradually tightened while strong demand has continued.

With Indonesia now wanting to import 260,000 cattle in the final three months, Vietnam still importing large numbers and the prospect of new Chinese orders adding to an already strong demand outlook, the price David Warriner pointed to back in March is suddenly looking more achievable.

Ms Hayes told Beef Central yesterday that the improved market outlook was finally giving NT producers cause to feel positive after successive years of morale-sapping setbacks, particularly the June 2011 export ban, the loss of orders from Indonesia as it sought to achieve self-sufficiency, and the impact of deepening drought.

The latter remains the key issue for producers as they watch and wait to see how the approaching wet season unfolds.

Most NT stations are currently busy with second round musters, far more secure in the knowledge this year that there will be buyers and good prices available for every head of cattle they have available to sell.

Ms Hayes said that while some pockets of the NT were in good condition, other areas remained badly-drought affected. The Top End dry season, for example, is among the driest the region has experienced in 74 years of records)

An early start to the wet and a string of good years was now critical if the northern industry was to mount a meaningful recovery.

“We need a run of solid years to be able to recover and go back into a normal phase when you’re investing in capital and able to invest back into your property and the future of your industry,” Ms Hayes said.

“For the health of the industry’s future there has to be a run of years where producers are receiving some really solid returns to ensure there is longevity going forward, because they have certainly had their fair share of struggles and adversity, so we are due for a run of good years and good prices.”

Ms Hayes said the improved outlook for cattle prices was also translating to renewed confidence in the northern property market.

After a long period of inactivity, several large NT properties have changed hands in the past 12 months, including Riveren and Inverway to Indonesian company Santori; Killarney and Birrimba to South Australian based Jumbuck Pastoral Company in March; Willeroo to Indonesian company Great Giant Livestock in April and Elizabeth Downs to Yiang Xiang Assets Pty Ltd, a private group from China, last month.

“We’re seeing a return to sensible market values for properties and that has been on the back of some foreign investment up here, it has put a floor in the market,” Ms Hayes said.

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Comments

  1. Edgar Burnett, 13/10/2014

    What we do not hear enough about is attacking the input costs of our operations. Ever since the Paul Keating era, the cost of finance has been too high. Most commentators do not realize how important a factor this is. This has lead to Australia now being recognized as one of the dearest countries on the globe to live and to operate a globally competitive business. No wonder Northern Cattle Producers are drowning it debt – the cost of finance has been gobbling up most of their income. And haven’t the Banks profited handsomely!
    How is the next generation of Producers going to get on? The one real solution is do what happened in Queensland in the Beijelke Joe era – form an Australia wide organisation based on what was the QIDC in Queensland. Bob Katter knows all about it because he was involved in it. Get behind this idea so that the next generation can carry on profitably and not be burdened with debt as are a lot of the current Producers.

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