Exporters wait on new permits as Q1 quota filled

James Nason, 20/02/2012

Australia’s feeder cattle export trade to Indonesia is in limbo as it waits for second quarter import permits to be released by the market.

The trade has entered a lull with latest Government figures confirming that export quota for the January to March quarter has all but been filled, with close to half of the quarter left to run.

All eyes are now on the release of Q2 quotas for April to June.

Industry speculation suggests the permits may be released by mid-March, much earlier-than-usual, with the aim of avoiding a repeat of the confusion caused by the late and limited release of Q1 allocations after the quarter had started in mid-January.

Exporters and importers are hoping that the announcement, whenever it is made, will contain a significant increase in quota volumes.

While signs of a shortage of cattle in the market support that outcome, it is considered no certainty, with the Indonesian Government maintaining its position that cattle numbers in the country are close to the volume required to achieve self-sufficiency in beef supply.

Several Indonesian trade sources have confirmed to Beef Central in recent weeks that feedlots within the country are operating well below capacity, a sign that Indonesia is struggling to source its required cattle numbers from local herds.

The current shortage of cattle has led to sharp increases in cattle and beef prices within Indonesia.

While good news for the country’s cattle farmers, and in line with the Indonesian Government's desire to stimulate greater local beef production, the inflated prices are said to be making life difficult for Indonesian consumers who are struggling to afford the higher cost of beef.

Whether that translates into increased pressure on the Government to increase import levels of Australian cattle and beef remains to be seen.

While prices for cattle in Indonesia are soaring, prices for live export cattle in Australia have dropped by about 15 percent since late last year, due to the limited number of available orders for the market and the subsequent oversupply of cattle to fill those orders.

Prices for feeder steers to Indonesia have fallen from about 220c lw in December to 185c now.

Export figures quoted at last week’s Senate Estimates committee hearings by Dean Merrilees, from the Department of Agriculture, Fisheries and Forestries’ Animal Export Operations, show that  that the 60,000 head quota for the first quarter is close beign filled, with almost half the quarter still to run.

Since January 1 Australia has exported 31,000 cattle to Indonesia, while another 17,190 have been approved for export and are in the process of being shipped.

Notices of Intention to export have been lodged for a further 12,300 head, with those applications still subject to Government approvals. (While the overall number totals 60,490 head – exceeding the 60,000 head quota – not all numbers included in the NOIs will result in actual deliveries,)

Exports so far this year compare with 2011 shipments of 31,656 head to Indonesia in January, 39,983 in February and 16,420 in March, totalling 88,059 for the first quarter last year.

The second quarter of 2011 saw exports of 133,201 head to the market.

That included a massive 81,912 head for the month of May alone, and just 17,542 head for the normally busy month of June, with the reduction due to the imposition of temporary suspension on exports by the Federal Government from June 7.

DAFF spokesperson Jo Evans said the 283,000 head quota for cattle imports was set by Indonesia at the start of the calendar year, and it was understood that the country had a process in train to revise those estimates if required as the year progresses.

“I do not have any way of giving you information as to how they will adjust that, other than looking at their own demand and supply balances and what is happening to prices in Indonesia, but it will be a matter for Indonesia to determine what they do that number,” Ms Evans said.

She added that the Australian Government was continuously engaged with Indonesia to discuss import quota issues.

One trade source told Beef Central last week that the industry was not well-equipped to manage sudden changes of import quotas without notice.

“Ships are not like taxis,” the source said. “You just can't flag them down.”


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