81th Edition: August 2020
We are all still hoping that more survivors from the 43 crew will be found after the tragic loss on 2nd September of MV Gulf Livestock 1 in a typhoon off Japan.
Indonesia : Slaughter Steers AUD $3.83/kg live weight (Rp10,700 = $1AUD)
Slaughter cattle prices saw another small rise during August up about 500Rp to push the indicator rate to Rp41,000 per kg live weight.
While Indian buffalo meat (IBM) is back in the retail market its availability remains limited but despite short supply its price still needs to be discounted to sell. Demand for everything in Indonesia except facemasks is down as household spending power has crashed during the pandemic. But fresh beef seems to be able to maintain or even strengthen its price in this economic climate while the cheapest red meat product needs to be discounted. This suggests that the demand and supply fundamentals of the two products are becoming disconnected. When IBM first appeared in the market it was essentially sold as a cheaper beef option which took a significant share of the market away from fresh beef. Perhaps now the consumer concept of IBM is as an entirely new category of red meat : cheap, low quality, frozen buffalo, which competes less and less with real fresh beef. If this is the case then fresh beef may well be able to claw back some of its lost market share when the economy eventually recovers. This will be very encouraging for importers who are otherwise seeing their trading position eroded through a weaker local currency and higher landed prices for feeders. Given this squeeze, any lot feeders not able to achieve above average performance in the feedlot will find it difficult to survive.
The July import number dropped back to a more normal 40,000 head while August shipments were similar at 38,500 which should give importers comfort that the market is not about to suffer from another bout of oversupply.
Darwin feeder steer prices were generally stable during August to end the month at around $3.40 per kg live weight.
Prices tend to be more volatile in Townsville/Queensland as a result of many more market influences and sale options.
Falling grain prices will also improve the capacity for Queensland feedlots to compete for stock which are in many cases similar to those sought after by live exporters to Vietnam.
Beef Central recently posted an article in which it reported that “Australian slaughter cattle are now officially the most expensive among major beef exporting countries in the world.” While this is true, our geography means that in respect to the live cattle trade, none of the other cheaper options can hope to compete for delivery of live animals to Asia. Box beef however is a very different matter.
Vietnam: Slaughter Steers AUD $4.29 / kg (VND16,800 to $1AUD)
Prices for slaughter cattle were unchanged during August at Dong 72,000 per kg live weight. Both July and August shipments have gone against the trend dropping down to 17,300 and 15,700 head respectively which are just a little below the medium term average. Importers have the same problems as their counterparts in Indonesia with demand reduced by the pandemic, a weakening local currency and higher CIF prices.
The main difference in Vietnam is that their favoured meat is pork and it has taken a massive hit as a result of the regional African Swine Fever (AFS) outbreak so demand for beef has experienced a compensatory benefit not present in Muslim Indonesia. Recent OIE figures show that the Vietnamese government reported that its pig population dropped by almost 6 million head since 2018 with infection recorded in all of its 63 administrative divisions.
China: Slaughter Cattle AUD $6.73 / kg (RMB 5.0 = AUD$)
Slaughter cattle prices moved almost 5% higher in both Beijing and Shanghai during August with the live price averaging Y33.65 per kg. In Beijing the price for Holstein bulls was Y29.2. Beef prices in both wet and supermarkets were sharply higher in Beijing while retail rates remained steady in Shanghai. Retail pork was also 11.5% higher in Beijing but steady in Shanghai.
We are all hoping for good news from rescuers searching for survivors of the MV Gulf Livestock 1 lost in a typhoon off Japan about the 2nd of September. This vessels was part of a fleet of ships carrying a huge number of dairy cattle being exported to China this year from both New Zealand and Australia.
Hellenic Shipping News on 27th of August reported that while exports of most products from New Zealand were down during July, the outstanding performer was the export of 30,000 live dairy cows to China. This seems an extreme number for a single month but considering the large vessels being employed in the trade and the very strong demand from China perhaps it is correct.
Philippines: Slaughter Cattle AUD $5.79 / kg (Peso 35.4 to AUD$1)
No change in live animal or retail beef prices once again this month. Generally depressing reports from my agent that prices are flat across the board with both supply and demand (for just about everything) decreasing. Everyone is very weary of the pandemic with little sign of improvement in the near term.
Thailand: Slaughter Steers AUD $4.69 / kg (Baht 22.6 to $1AUD)
Slaughter cattle prices increased by 12% to Baht106 per kg live weight as a result of a sudden restriction in supply caused by a surge of Covid-19 cases in Myanmar leading to closure of the entire border including the main cattle crossing point of Mae Sot. Feeder prices remain steady at Baht120 per kg live weight.
At Sea, still
I am writing this from the MV Devon Express, on the way back from delivering a shipment of slaughter cattle from Darwin to central Vietnam. I hope to get off the vessel in Wyndham, Western Australia and after quarantine in Kununurra head home to Darwin for a break away from livestock vessels.
The table prepared by MLA in its July LiveLink shows how Townsville has overtaken Darwin as the port with the highest number of live cattle exported during the previous 12 months. (Note however that Darwin is ahead for the first 6 months of 2020) This surge is due to a number of factors, the main one being that Vietnam is the destination with the fastest rise in demand and they require mainly slaughter cattle which are much more plentiful in north Queensland than in the Northern Territory. Another factor, minor but still significant, is the efficiency of the loading arrangements at the Townsville port. As a proud Territorian it pains me to admit that the loading arrangements at Townsville are superior to Darwin. See photo below. The main difference is that the platforms for the stevedores to move the cattle out of the crates and onto the ship are connected along the full length of the 3 trailers of the truck. In addition, the driver opens the walk through gates so from a single parking position all three trailers of the truck can be unloaded with the driver managing the walk -through’s ending up back in his cabin as the last animal walks onto the ship. I suggest that those responsible for this process in Darwin should review their systems.
August 2020 prices
These figures are converted to AUD$ 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||March 20||13.98||19.14 B$8.60||3.76||4.19|
|Rp9,800||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|
|China Beijing||March 20||–||17.93||4.14||7.58|
|Pork per kg||April 20||20.22||24.27||3.78||7.14|
|Beijing Y63.4||May 20||18.49||23.23||3.61||6.58|
|Darwin Feeder Steer||June 19
|Feb 2020 $3.80||March 2020