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Can Northern Australia service the sudden increase in live export demand?

James Nason, November 7, 2013

With Indonesia, Vietnam, the Philippines and Malaysia once again competing for live cattle, Australia's northern live export industry is once again enjoying a positive outlook for demand. 

But can northern Australia, after heavy recent rounds of drought and market forced destocking, now satisfy that demand?

Dr Rick Trivett from Austrex gave voice to the question on everyone's mind during the trade and market access session at last Thursday’s LiveXchange conference in Townsville. 

After a very tough 12 months in northern Australia, he questioned, how confident were others that Australia will now be able to service this enormous increase in demand?

NT Department of Primary Industries chief executive officer Allister Trier and NQ cattleman and former Meat & Livestock Australia chair Don Heatley shared their insights with their conference, while Beef Central also sought the views of NW Qld cattle trader Peter Abdy and Northern Territory livestock agent Barry Groves, Magnat Livestock.

Mr Trier, who has previously worked as a live exporter with Austrex, said that while some feeder cattle were still available in the Territoy, heavy cattle were now in extremely short supply. He was aware of some around Alice Springs, but the owners ‘were waiting for the price to be right’ before selling.

“But combined with seasonal conditions at the moment it is tough, things aren’t completely lining up, that is the reality and we will just work through it.”

Ex-MLA chair and north western Queensland cattle producer Don Heatley said there was no doubt northern Australia was going to have difficulty filling the volume of orders now in the live export pipeline.

“If you look at the Downs country in North Western and Western Queensland generally, the herd has been, not decimated, but very severely knocked around,” he told the conference.

“I think the telling factor is going to be the fact that people have dipped into next year’s cattle by a long way, and I think that is going to have a very telling affect over the next couple of years.

“The one thing that has been pretty noticeable is that it has been a one way trip for most cattle…so that doesn’t fare well for cattle numbers.”

However, he added that it never ceased to surprise how many cattle came out of the woodwork when seasons and markets suddenly turned. 

“We stand around and talk about these sorts of issues on many occasions and surprisingly enough when it rains and the price goes up, it is just amazing where the cattle come from isn’t it,” he said.

Fellow north western Queensland cattle producer Peter Abdy, who operates a large cattle trading business based at Cloncurry, said it was always hard to tell what was in people’s paddocks, but he agreed that exporters would face a tough time finding adequate cattle after the destocking that has occurred this year.

“It is quite drastic. There are a lot of cattle that have gone that won’t come back,” he told Beef Central.

Mr Abdy said he was aware of a handful of good operators who were financially viable who had been stockpiling steers in the Territory, and he believed the recent jump in export feeder steer prices from $1.70 to $2.10/kg would help to flush out available numbers.

“That will pull some cattle out if they’re there, but I can’t see where they’re going to get these 100,000 cattle.”

He also concurred with Mr Heatley’s comments that it was surprising what came out of paddocks when conditions turned.

“We have a lot of agistment cattle on our place and it is surprising how they have hung on," Mr Abdy explained.

“There’s a lot of people trying to keep the nucleus of their herd alive, if they can then they should come out alright.

“There is a lot of that going on and it is correct what Don says, it is surprising what does come out of paddocks when things turn around.”

NT livestock agent Barry Groves, Magnat Livestock, said all live export yards around Darwin were now full, and were booked up until the end of November/early December.

He agreed that finding 100,000 cattle by Christmas would prove a tough ask.

“We’re just about out of cattle, feeder cattle are in short supply now,” he said.

“We’ve had difficulty keeping up this year as it is, so it will be hard to see how they will get the numbers they want now.”

A range of northern industry sources contacted by Beef Central this week have indicated that $2.10/kg remains the firm price for feeder steers ex-Darwin and $1.90/kg for feeder heifers.

Slaughter cattle rates appear a little more variable but as a guide, Beef Central is aware of least one order currently out for 350-500kg steers ex-Darwin priced at $1.95c/kg.

While most northern producers remain squarely focused on the challenge of keeping cattle alive until the wet season arrives, the knowledge that prices have returned above the $2/kg range and should stay there into the new export year should offer some much-needed reason for optimism.

The squeeze is now on exporters and importers. Short supplies in northern Australia mean they now have to pay more for cattle at this end, while at the same time the Indonesian Government is pressuring importers to sell finished cattle at the other end at prices that support its push to lower prices in wet markets from 100,000IR/kg to 76,000IR/kg.

 


 

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