Australian cattle exports to Indonesia increased to a five-year high in 2024, with larger supplies and lower cattle prices compared to first half of the previous year helping to drive trade flows higher.
The big question for the trade is will the trend continue in 2025?
Beef Central sought the views of several key stakeholders in the export, import and production sectors.
We found many believe 2024 levels are likely to be reached again in 2025, but few see exports increasing much beyond last year’s volumes.
Linking many of their forecasts was the opinion that base cattle supply will be higher this year while base demand from Indonesia will remain similar to last year.
Other factors including constraints on shipping availability, limited permit allocations, increased supply within Indonesia of beef from FMD/LSD-affected herds and yet-to-be-determined Indian Buffalo Meat import volumes also tempered expectations of a significant year-on-year lift in volumes in 2025.
550-650k head range expected
For this article Beef Central asked five trade stakeholders – which included large scale exporters, producers and importers – to provide a guess as to how many cattle Australia will export to Indonesia in 2025.
The general consensus of answers was within the range of 550,000 to 650,000 head.
Most asked not to to identified in order to be able to speak more freely about factors they believe are influencing the market, so we have not identified individual respondents, but have summarised below the various points they raised to support the view that numbers in 2025 are likely to remain similar to last year.
Cattle supply from northern Australia
In 2024 Australian cattle exports to Indonesia totalled 537,274 head. That was the largest year of cattle exports to Indonesia since 2019 when severe drought resulted in 668,921 cattle being transported out of the north by sea to the nearby major market.
The supply outlook this year points to more cattle being available for export to Indonesia following a string of favourable wet seasons which has boosted northern production.
Discounted heifer prices relative to steer prices will also likely see more heifers imported by Indonesia this year.
Domestic cattle supply in Indonesia
Another source of beef supply within Indonesia is from cattle being culled due to the ongoing foot and mouth (FMD) and lumpy skin (LSD) disease outbreaks.
A drop off in vaccination rates last year has seen both diseases flare up again which is causing farmers and lot feeders of local cattle to sell them as soon as they get infected, at cheap prices.
Indonesian requirements to import breeding cattle
Another factor with ramifications for future supply in Indonesia is the Government’s objective to accelerate local milk and beef production with the view to supplying free-nutritious meals to school children.
The Indonesian Ministry of Agriculture requires that breeding cattle must account for at least three percent of cattle held by importers, based on their pen capacity, which is subject to a periodic audit.
Importers of meat and dairy products are also required to commit to importing at least 20 dairy cattle and/or beef breeders (per company) to support the free-milk-and-beef-for-school-children initiative.
Australia is currently the only country permitted to supply live cattle to Indonesia, but, as part of the initiative to grow Indonesia’s milk and beef herds, Government officials have publicly stated on several occasions that they plan to open the Indonesian market to live cattle imports from Brazil and New Zealand.
Indonesia has released permits for only 350,000 cattle
Indonesia’s decision to release cattle import permits for 2025 for only 350,000 cattle – significantly less than the number it imported in 2024 – is sowing some uncertainty in the northern cattle trade as it looks ahead to 2025.
Some trade stakeholders are comfortable that Indonesia will allow importers to apply for further permits later in the year and trade will flow as normal.
But some also expressed concern that there may be additional strings to the release of new permits if and when they become available later in the year.
With no further clarity from Indonesia, exporters can only wait and see how the all-important live cattle permit issue unfolds as 2025 progresses.
Lack of shipping capacity
Another changed dynamic for the trade outlook is the lack of shipping capacity available to Australian trade routes compared to previous years.
Australian exporters can only use ships that meet the stringent certification standards of the Australian Maritime Safety Authority. The recent sell-off of the Wellard fleet to offshore owners may see the already small number of Australian-accredited vessels reduce further, given the strong demand that exists for their use elsewhere in the world and where certification requirements are less stringent.
In particular, demand from the Middle East for cattle from South America is keeping the bigger ships away.
The issue was said to be exacerbated by the six-week delay in the release of import permits by Indonesia last year, which resulted in the redeployment of several AMSA-accredited vessels away from Southeast Asia on time-consuming voyages to Israel, Pakistan and Mexico where they remain engaged.
Late last year, when demand from Indonesia began to increase as importers started restocking feedlots ahead of Ramadan, some exporters told Beef Central that they had orders and cattle to send more shipments than they did, but the lack of available shipping was the primary constraint that prevented them from exporting more cattle at the time.
“This matter will probably be the single biggest influence over what numbers go to the market this year,” one exporter commented to Beef Central.
Beware a return to widespread dry conditions
One point most stakeholders contacted by Beef Central also emphasised was the major ramifications a return to drought would have on the market given the increased cattle numbers cattle across the north.
Demand side
On the demand front, cost-of-living and local economy issues in Indonesia remain a real issue which is capping local meat prices.
There is also talk that new players in the Indonesian feedlot trade are selling cattle at prices considerably lower than long-established feedlots – as much as 20-50c/kg – in order to win new market share, which adds further downward pressure on viability for existing feedlots and limits potential numbers to Indonesia.
Costs of feed for Indonesian feedlots are also anticipated to rise higher this year through a contribution of Indonesian Government regulations which tightly control feed commodity supplies in Indonesia, and the effect of currency movements.
Currency factor
Australian cattle exports to Indonesia are subject to the variability of three currencies – the Australian dollar (AUD), the US dollar (USD) and the Indonesian Rupiah (IDR).
Australian cattle to Indonesia are traded in US dollars and so the recent fall in the AUD relative to the USD should make Australian cattle prices more favourable to Indonesian importers.
But a simultaneous fall in the IDR relative to the USD has largely offset the lower AUD effect for Indonesian importers of Australian cattle.
At the same time the weaker IDR is making the costs of shipping and imported feed more expensive for Indonesian feedlots.
Imports of boxed beef and buffalo meat
There are also some signs Indonesia may be planning to wind back the amount of boxed beef it imports each year, in order to support the growth of its own herds for its free nutrition for school children initiative.
In addition to importing more live cattle from Australia last year, Indonesia imported 23 percent more Australian boxed beef to a total of 84,178t.
Despite announcing in January that permits would be released for the import of 188,000 tonnes for 2024, commercial beef importers still do not have import permits for 2025 in hand.
While it was anticipated that it may take a few weeks for permits to be physically issued after the permit announcement, Indonesian reports circulated to the Australian trade late last week suggested some concern the Indonesian Government may be reconsidering how the 188,000 tonnes of boxed beef would be split between commercial importers and State-Owned-Enterprises (SOEs)
Importer associations are said to be concerned that the government is considering reducing commercial importers’ allocation to 80,000t (with the balance to be imported by SOEs) and have written jointly to the National Food Agency seeking clarification.
Indonesian media reports also indicate that the Government has still not yet issued import permits for Indian Buffalo Meat either.
According to that report Deputy Minister of Agriculture Sudaryono told local media the ministry “will slowly reduce the volume of beef imports each year and increase the import of live cattle each year”.
The free school lunch program is contributing almost nothing as it does not have the budget to be effective. There is no milk and certainly no beef in that lunch box. As it sits right now its an embarrassment.. but Prabowo may well fix it.. he is a determined chap!
The slide in the IDR to USD is the biggest concern to importer profitability..