82nd Edition: September 2020
- China slaughter cattle prices skyrocketing.
- Vietnam slaughter rates manage a modest increase.
- Indonesia struggles with pricing fixed by the government.
Indonesia: Slaughter Steers AUD $3.83/kg liveweight (Rp10,700 = $1AUD)
Slaughter cattle prices remained generally firm during September with only a slight variation in rates between Lampung at Rp41,000 per kg and West Java where a small number of stock sold as high as Rp43,000. As the bulk of the sales were at Rp41k I have retained this figure for the September indicator price.
Retail supplies of Indian buffalo meat (IBM) remain tight with prices unchanged. Given the explosive spread of the Corona virus in India, it may be quite a while before IBM is able to be processed and exported in the very large volumes seen in previous years. This restricted supply is likely to apply to the entire global supply chain from Vietnam, the largest importer by a huge margin followed by much smaller volumes to Malaysia, Middle East, Philippines and Thailand.
August imports of feeders remained fairly consistent at about 38,500 which is close to the monthly average for the previous year.
See below a copy of MLA data showing Australian live cattle exports for the 2020 calendar year until the end of August.
|Country||2020 Year to Date||Year/year % change|
The Indonesia Australia Partnership on Food Security in the Red Meat and Cattle Sector has been doing some great work over recent years with my favourite project examining a variety of production systems using Australian breeding cattle. See a link below to two detailed progress reports.
- The Joint State of the Industry Report provides an assessment of the bilateral trade in live cattle and beef products between Australia and Indonesia in 2019 and examines factors that affected investment, trade and consumption.
- The July 2020 Update examines the impact of the COVID-19 Pandemic on the bilateral trade and covers a very different operating environment from that experienced in 2019. The Update highlights the current challenges experienced by Australian and Indonesian businesses along the supply chain, as well as innovative industry responses to the pandemic.
Darwin feeder steer prices were relatively steady during September ending the month at about $3.45 per kg live weight.
Supplies continue to be very tight with cattle stockpiled on the northern flood plains and Top End depots representing a large proportion of the remaining cattle available for export from Darwin during the 2020/21 wet season.
This means that prices are likely to rise strongly during the next 4-6 months, a disappointing prospect for Indonesian importers. The problem for Indonesian lot feeders is that their government has fixed a narrow range of prices that they are permitted to charge for their product so they are not able to simply put up their fat cattle sale price to cover any increase in their purchase price.
Two very large vessels loading out of Townsville for Vietnam at the same time at the beginning of October has put huge pressure on north Queensland prices at the same time as Aussie feedlotters are able to pay top price for the same animals.
Vietnam: Slaughter Steers AUD $4.43 / kg (VND16,700 to $1AUD)
The slaughter price increased by an average of Dong 2,000 per kg live weight during September.
Unlike Indonesia, the Vietnamese importers operate in an open market environment where prices are set by the natural interaction of supply and demand.
CIF prices have been steadily creeping up over the last 5 months with the importers absorbing most of these increases while retail rates remained steady. Vietnam suffered some impact from the virus pandemic but brought it under control quite quickly and effectively, allowing their economy to recover much of its lost activity.
Now that the local economy is growing again, although not back to full strength, this might be the opportunity importers have been waiting for to increase their prices to offset rising costs.
The ongoing severe reduction in pork supplies as a result of the African Swine Fever (ASF) may also have helped justify increased rates for fresh beef.
Vietnam has for many years been the largest importer of IBM in the world even though the majority of the product has ended up in China. As noted above, their IBM supply will also have reduced as a result of the pandemic in India so any of this product that would have normally ended up in the domestic market may also be in reduced volumes.
Import numbers for August were 15,780, similar to the previous two months but down on earlier months in the year.
“Along with China, Vietnam is the only major Asian economy expected to register positive growth in 2020”. Vietnam’s 2.62% GDP increase in the third quarter is an improvement on the 0.39% year on year increase in the second quarter but remains several percentage points below the pre-pandemic third quarter GDP growth of 7.31% in 2019. (Oxford Economics)
China: Slaughter Cattle AUD $7.65 / kg live weight (RMB 4.9 = AUD$)
Slaughter cattle prices have risen dramatically again in September with steep rises in both Shanghai and Beijing.
In Shanghai the rate rose from Y33.2 last month to Y38 (14.5%) for September while in Beijing the rate increased from Y34.1 to Y37 (8.5%).
While I don’t have specific proof, I expect that it would be reasonable to assume that IBM has become quite scarce, pork still remains severely short due to ASF while the domestic economy has been reported to be making a useful recovery. Added to this, one of China’s most significant celebrations, the “Golden Week” holiday commences on the 1st of October and continues for 8 days. Chinese travellers are expected to make 600 million domestic trips within China according to Chinese online travel operator Trip.com. The holiday is still expected to fall short of the 782 million trips Chinese travellers completed during the same holiday last year. (Fortune 29/9/2020)
Philippines: Slaughter Cattle AUD $5.85 /kg (Peso 35.0 to AUD$1)
Once again, no change in live animal prices during September. The general economy continues to struggle with the wide ranging effects of the pandemic. The most positive comment from my agent was that life in general is difficult but not getting any worse.
Thailand: Slaughter Steers AUD $4.56 / kg (Baht 22.6 to $1AUD)
Slaughter cattle prices were a little weaker at Baht103 per kg live weight down about 3% from August. With tourism accounting for 14 percent of the Thai economy the impact of Covid 19 throughout the country continues to be severe.
At Sea, again.
After disembarking from the MV Devon Express in Wyndham I completed my entry quarantine in Kununurra at the Kimberley Grand hotel (Western Australia). The hotel provided an excellent venue for quarantine with great rooms, service and exceptional food. Highly recommended! This was followed by a very enjoyable first week of freedom on land (in Darwin) since 31st of March. I am now onboard the MV Gelbray Express taking cattle and buffalo from Darwin to Vietnam and this will be my last trip for 2020.
The tragic loss of the MV Gulf Livestock 1 occurred during my last voyage on the MV Devon Express.
You can imagine the concern amongst the Filipino crew as many of them had friends amongst the crew on the missing vessel.
When I received an email advising the names of the Aussie stockman and vet, the Captain was quite distressed as William Mainprize had been a stockman on the Devon recently and was well liked by the all onboard.
William and the Captain were both keen guitarists and played together in the shipboard band (All Filipino vessels have a band onboard).
Shortly after our discussion the Captain returned from his cabin and gave me a copy of the photo below showing William enjoying a session with the band only a few months before. The Captain is in the blue shirt on the right of the photo.
September 2020 figures
These figures are converted to AUD$ from their respective currencies which are changing every day so the actual prices here are corrupted slightly by constant foreign exchange fluctuations. The AUD$ figures presented below should be regarded as reliable trends rather than exact individual prices. Where possible the meat cut used for pricing in the wet and supermarket is Knuckle / Round.
|Indonesia||April 20||13.27||12.35 B$8.16||3.57||3.99|
|Rp10,200||July 20||12.75||13.68 B$8.09||3.92||3.97|
|Rp10,700||August 20||12.15||13.83 B$7.47||2.99||3.83|
|Rp10,700||Sept 20||12.43||13.55 B$7.48||3.27||3.83|
|China Beijing||April 20||NA||17.53||4.18||6.97|
|Pork per kg||May 20||18.49||23.23||3.61||6.58|
|Beijing Y58||June 20||18.07||22.18||3.49||6.41|
|Darwin Feeder Steer||June 19
|Feb 2020 $3.80||March 2020