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On Fri, 18 Oct. 2019, 22:06 Southeast Asian Beef Market Report, <comment-reply> wrote:
Dr. Ross posted: "70th Edition : September 2019.
China slaughter cattle prices jump another 10%. Indonesian government issues new decree for breeding females. The African Swine Fever disaster extends to South Korea and East Timor.
Indonesia : Sl"
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New post on Southeast Asian Beef Market Report
by Dr. Ross
70th Edition : September 2019.
- China slaughter cattle prices jump another 10%.
- Indonesian government issues new decree for breeding females.
- The African Swine Fever disaster extends to South Korea and East Timor.
Indonesia : Slaughter Steers AUD $4.17/kg live weight (Rp9,600 = $1AUD)
Slaughter cattle prices were weaker this month with the September range from Rp39,500 to Rp40,000 per kg live weight. I have used Rp40k as the indicator rate for September with this price predicted to weaken further in coming months as the huge import numbers from June (60k) and July (78k) are presented to the market for sale. Preliminary reports of feeder import numbers for September indicate that the volumes are finally dropping back to more sustainable levels of around 40,000 head per month.
On the 31st of July the Minister signed a new decree which supersedes the previous 1 heifer for 5 feeder requirement. This new decree requires importers to import heifers at a rate of 5% of their feeder cattle import recommendation. I am advised that many senior staff within the Ministry of Agriculture were not advised of this new decree until the end of September or early October. Naturally, there is a great deal of confusion about the details of how this will work and also what impact a change of Minister might have. Later in October the President elect will be formally confirmed as President and then appoint a new ministerial team. The usual arrangements are that all Ministers and department heads are replaced so we will probably have a new group of policy makers before the end of this month. The representatives of the feeder cattle importers have already expressed their opposition to the new decree and are probably hoping that a new Minister and Director General might reconsider the details once they are appointed. Will this new decree be confirmed or modified/rejected by a new Minister? What is the status of the penalties (no import permits for one year) for those who failed to comply with the old 1/5 requirements? What are the penalties for importers who fail to comply with the new 5% requirement? Etc.
A requirement of 5% or 1 heifer for every 20 feeder cattle imports is obviously much less onerous than 1 heifer for every 5 feeders but the fact remains that lot-feeders have little or no interest in breeding cattle. Importing feeders is a moderately profitable business if the operator is efficient but the profit margins are not so high that they can subsidise large losses on breeders. If we assume that the annual total feeder imports will be say 600,000 spread across about 20 active importers then each importer will average 30,000 feeder imports which translates at 5% to a requirement of 1,500 heifers each @ guess $1500 landed or a total investment of $2.25 million. When the drought breaks in northern Australia this wet season, breeding heifer prices will rise by at least 50%. Almost every producer in the Northern Territory will keep every heifer they have to replace their depleted herds so numbers for sale will be insignificant. Queensland may have some more available but their situation will be similar if their drought breaks too. Even if the Indonesian importers were happy to purchase the 30,000 heifers to meet their 5% target, the chances of them being successful given the post drought high prices and low supply are negligible so they are once again back where they started – unable to comply with their government’s requirements.
Brazilian frozen beef imports are still in the pipeline but I am advised that there may be further delays in delivery as additional inspections and approvals of slaughter facilities will be necessary before final halal certification is completed.
In the meantime, it appears that Indian buffalo supplies are adequate for the market’s needs.
Photo : Pasar Modern wet market in BSD City, South Tangerang. This “Modern” wet market is an initiative by Tangerang and other regions to upgrade smelly and dirty old wet markets to make them much cleaner and more attractive to consumers. This one is very successful as you can see.
Vietnam : Slaughter Steers AUD $4.62 / kg (VND15,800 to $1AUD)
Demand from Vietnam remains strong with port of Townsville being the main focus of most exports due to the good supplies of suitable cattle available in the surrounding regions. Slaughter prices have remained steady at an average of Dong73,000 per kg live weight for heavy steers. Prices for locally bred cattle have increased significantly as a result of the shortage of pork but Australian cattle access is restricted by ESCAS so this has tended to hold their prices steady. North Queensland have a large supply of slaughter cattle which fit the Vietnamese requirments as well as a number of feedlots where lighter cattle are now being fed for up to 60 days to ensure that sufficient quantities of the minimum 500kg live weight export steer is always available.
China : Slaughter Cattle AUD $6.71 / kg (RMB 4.84 = AUD$)
The average slaughter prices in both Beijing and Shanghai have shot up once again from Y29.1 per kg live weight in August to Y32.5 in September, an 11% rise adding to the rise during August of about 5%. Pork prices were steady in Beijing but rose by almost 5% in Shanghai during September. It won’t take much more of a lift in the price of slaughter cattle to crash through AUD$7 per kg live weight. Wet market beef prices are rising faster than supermarket prices so this will put increasing pressure on demand for live cattle to slaughter locally.
The big question is how will the world protein market manage the massive shortfall in annual demand of more than 10 million tons of pork that will be missing from Chinese production plus the additional shortfalls developing in Vietnam, South Korea and other large pork producers infected with African Swine Fever (ASF). Demand will switch to chicken, fish and beef which will in turn put pressure on their supply chains. Millions of tons of any of these products cannot simply be produced overnight so there will be huge gaps in supply and demand will largely remain unfulfilled regardless of how quickly producers try to respond. Broiler production systems take a long time to establish, new grain crops need to be grown, fish stocks are already stretched to the limit and beef cattle growers take an eternity to expand their production capacity. The only possible outcome is a massive world-wide shortage of protein for at least two or three years at the absolute minimum. Prices of all protein must rise and a large number of consumers must simply miss out. With consumers all over the world negatively impacted one way or another, politicians will no doubt get involved and where that leads is anyone’s guess. A world short of food can become a very dangerous place.
Photo : Beijing supermarket pork Y35-54/kg = AUD$7.23-$11.15 per kg.
Philippines : Slaughter Cattle AUD $4.89 / kg (Peso 35.4 to AUD$1)
No change in slaughter prices this month although the market generally remains buoyant. See the comments below from my agent in the Philippines explaining how food consumption is rising across the board. “Another detail which was pointed out to me at some of the wet markets was that vendors are "finish selling" their daily inventories "well before" the usual closing time. No left overs… If you are late at the market, the fruits are gone.”
ASF outbreaks in the Philippines have spread around the main island of Luzon but have so far been prevented from spreading to other parts of the island chain.
Thailand : Slaughter Steers AUD $4.38 / kg (Baht 20.8 to $1AUD)
Slaughter cattle prices have slipped during September to around Baht 91 per kg as supplies of finished cattle on hand are in excess of local demand. This situation has arisen as local lot feeders had stocked up ready to supply the new quarantine stations (Myanmar side) and abattoirs (Chinese side) expected to be established on the Myanmar/China/Mekong River border area but the opening has been delayed so these excess numbers have been discounted to keep them moving through the local Thai supply chains. Feeder cattle prices are still quite high at 110 Baht/kg live weight (AUD$5.29) which is very encouraging for future potential live exports from Australia. ESCAS regulations won’t permit Australian cattle imported into Thailand for re-export to China but large numbers of “new” feeders will be required to fill the gap in local slaughter cattle supplies once the new Chinese abattoirs start to take significant numbers.
Map from FAO : ASF update as at 3rd October 2019 showing new outbreaks reported from 26th September until 3rd October in dark red including South Korea, the Philippines, China, Russia, Myanmar, Cambodia, Laos, and Timor-Leste.
Photo from my sister Lynn from Honolulu : Bison strip loin selling for USD$50 per kg or AUD$74.
Whole Foods in Honolulu, locally produced grass fed bottom round for USD7.99 per kg or AUD$11.75.
Hong Kong is one of the most expensive places in the world in any context from hotel rooms to food and real estate. Beef is no exception. See the selection of beef below from around the world at the “City’s Super” supermarket chain. This is obviously the top end of the market but even the cheap product is still very expensive by Australian standards. Locals on a budget eat imported frozen Brazilian beef.
Aussie grain fed Angus Rib Eye @ AUD$152 per kg. (using$1 HK = .19 $AUD)
US Prime Angus Rib Eye @ AUD191.90 per kg.
British Rib Eye @ AUD$228 per kg.
Korean Hanwoo Striploin @ AUD$446.50 per kg.
Aussie grade 9 Wagyu Rib Eye @ AUD$315.40 per kg.
Japanese A5 Wagyu Striploin @ AUD$437 per kg.
These figures are converted to AUD$ 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.
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Major upsets in global meat supplies are underway.
This is a good source for historical as well as up-to-date information.https://www.pigprogress.net/Health/African-Swine-Fever/