Pastoral Market Update – September 2018

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September 2018

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The Pastoral Market Update (PMU) is a document published monthly by the Department of Primary Industry and Resources to provide information on livestock exports from the Port of Darwin and interstate cattle movements.

Historical records for previous exports are available from the department’s website.

PMU September 2018

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New post October Market Report : S.E. Asian Beef Industry

Dr. Ross posted: "59th Edition : October 2018. Key Points Indonesian prices weaken again as over-supply looms. China prices remain firm as African Swine Fever continues to spread. The Philippines price breaks through the $4 mark for the first time. "

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October Market Report : S.E. Asian Beef Industry

by Dr. Ross

59th Edition : October 2018.

Key Points

· Indonesian prices weaken again as over-supply looms.

· China prices remain firm as African Swine Fever continues to spread.

· The Philippines price breaks through the $4 mark for the first time.

Asian Slaughter Steer

Indonesia : Slaughter Steers AUD $3.93/kg live weight (Rp10,700 = $1AUD)

After 9 months of steadily rising prices, the Indonesian slaughter cattle rate has fallen back this month from Rp43,000 in September to Rp42,000. All the advice I am receiving suggests that this is only the beginning of a significant and ongoing slide in prices as a result of a serious oversupply situation. This price reduction indicates just how narrow the margin is between under and over supply. Only last month importers were selling unfinished, short-fed cattle to ensure their customers had adequate supplies but the large numbers imported during July (60k) and August (70k) are already flowing through to the market producing a strong oversupply situation which can only continue until all of the July and August imports have worked their way through the system which could easily continue well into December.

I visited the Bambu Kuning which is the large wet market in Bandar Lampung (Sumatera) during October (see photos below) where the traders told me that their sales had been suffering since Lebaran (late July) because they were unable to pass on the steadily rising slaughter cattle prices to their customers. At the same time, the ever present Indian beef provides customers with a cheaper alternative.

The weakness of the Indonesian Rupiah is also having a significant effect on importers margins. The Rupiah has fallen against both the USD and the AUD producing a multiple negative affect as sea freight is paid in USD while the cattle are purchased in AUD. In addition, prices of cattle in the north of Australia rose roughly 5 cents per kg to end up at about AUD$3.10 per kg live weight at the end of October. This price level is likely to remain relatively stable until the drought breaks in Australia at which time the rates for cattle across the entire country will rise sharply, producing another unhappy shock for the Indonesian importers.

The first shipment of Indonesian government sponsored breeding cattle imported from Australia has arrived in central Java for subsequent distribution to small holders right across the archipelago. Two further shipments are still in the preparation stages with a possible total number of breeders imported estimated to be about 6,000 head.

The problem of the inability of importers to fulfil their requirement of importing 1 breeder for every 5 feeders remains unresolved. The only certainty is that virtually every importer will fail to comply (by a wide margin) with their signed agreement.

Photo1, Beef in the Bambu Kuning MarketPhoto : This beef in the Bambu Kuning market was sourced from Santori, one of the largest importers/lot feeders in Indonesia with two large feedlots in the Lampung area. The prices ranged from Rp110,000 to Rp130,000 per kg depending on the cut.

Photo2, Indian Frozen BeefPhoto : At the next stall was a trader offering frozen Indian beef for Rp90,000 to Rp100,000 per kg. Traders stated that the price for Indian product is simply managed up and down to represent a discount on local product of about 25%. The product is obviously frozen and the trader told us that the customers always touch the beef to confirm that it is cold and therefore from India.

The recent natural disasters caused by earthquakes and tsunamis in Lombok and Sulawesi have made international news with some people thinking that these types of disaster are uncommon events. Indonesia is located on the geological “Pacific Ring of Fire” and as a result is constantly subjected to severe earthquakes and volcanic eruptions. The risk of such disasters is ever present and, in the event that a severe event occurs in a heavily populated area, has the potential to deliver a massive blow to the Indonesian population and their economy. See below a map which plots the location of major earthquakes (over magnitude 5) during the last 50 years.

Photo3, Location of Earthquakes in IndonesiaMap : from Kompas showing the location of earthquakes in Indonesia of magnitude greater than 5 during the last 50 years.

Vietnam : Slaughter Steers AUD $4.13 / kg (VND16,700 to $1AUD)

Slaughter rates were generally steady during October with the AUD price reduction above due to a small strengthening of the Dong against the AUD. The Vietnam market remains an extremely vital alternative to Australian exporters as their number one market in Indonesia heads for a steady decline.

Photo4, Dui boPhoto : Dui bo is the Vietnamese word for beef knuckle. The kg price of Dong279,000 converts to AUD$16.71 per kg at the VinMart supermarket in Ho Chi Minh City.

Photo5, Roadside Beef stallPhoto taken by my good friend Dr Vinai Suwanidcharoen who was visiting Vietnam during October and passed this very efficient roadside beef stall (local cattle). The head serves as a clear advertising device while the whole outfit can be packed onto the back of the motorbike with minimal time, effort and cost.

China : Slaughter Cattle AUD $5.56 / kg (RMB 4.95 = AUD$)

Slaughter cattle prices remained relatively stable during October with the Beijing rate at Yuan 27 per kg live weight and the Shanghai rate holding at Y28.

The African Swine Fever (ASF) outbreak continues to spread across China with new cases identified in the far South Western provinces during October (see map below). ASF is a particularly difficult disease to deal with because it can be spread by pig products as well as live pigs. The only sound approach to control and eradication is via slaughter of all pigs in infected premises followed by a long quarantine period and total regional travel bans on both live pigs and pig products. The result is collapsing prices in areas which are under quarantine and sharply rising prices in areas that are not infected but have low numbers of local pigs. This situation creates the classic problem for officials trying to prevent transmission of the disease from infected areas. As the price differential expands between the infected/low price area and the high price/non-infected area, the financial incentive for smuggling live pigs or pig products from the infected to the clean areas becomes greater and greater. And profit driven smugglers are always more successful than government officials.

Photo6, the Outbreaks in ChinaMap from recent article by Simon Quilty showing new outbreaks at the end of October in the south and south west of China.

Philippines : Slaughter Cattle AUD $4.06 / kg (Peso 38.2 to AUD$1)

Strong increases in both beef and live cattle prices combined with a stronger Peso has pushed the live cattle slaughter price through the AUD$4 barrier for the first time since this report commenced recording the Filipino prices in mid 2014. At that time, slaughter cattle prices were below AUD$2 per kg live weight! I am sure that Australian live exporters will be digging through their old phone books to find the numbers of their original Filipino importers who have been dormant for more than two decades. The photo below was taken by my local agent when he visited the wet market in General Santos City in Mindanao. Wet market beef prices of knuckle have lifted from Peso 345 in September to P380 in October. The supermarket price has seen a similar increase from P365 to P400 in a single month.

Photo7, Beef trader in MindanaoPhoto : A very happy beef trader in General Santos City, South Cotabato, Mindanao. Not surprising given the rapid rise in prices.

Thailand : Slaughter Steers AUD $4.09 / kg (Baht 23.5 to $1AUD)

Prices have firmed this month with bulls increasing from THB95 to 98 while steers have lifted from THB92 to 95 at the end of October. My agent advises that the flow of cattle from Myanmar into Thailand has commenced again after recent flooding but the quality is still poor and not providing much competition for local stock. At the same time there are reports of large numbers of Thai-sourced cattle being trucked (smuggled) into China through the northern Lao border gate near Luang Namtha where the new Silk Road railway enters Lao from China. Some of the figures quoted were as high as 1,000 head on a single day.

I visited Chiang Mai in northern Thailand during October with Fraser Macfarlane and had a good look at the local beef industry. Thailand seems to be changing faster than many other parts of Asia with supermarkets capturing a much greater share of retail sales than the traditional wet markets. Large national and international supermarket chains presented huge displays of beef (and many other products) while the wet market offering was very disappointing. The photo below was taken at the Warorot Road wet market in China Town, Chiang Mai. This is one of the largest wet markets in Chiang Mia but only had one table selling beef and it was mixed with larger quantities of chicken and fish. We visited two large supermarket chains, Makro and Rimping, both of which had very large offerings of beef from a wide variety of sources.

Photo8, FraserPhoto : Fraser standing next to the small amount of beef on this table which was selling at the relatively high rate of THB300 per kg while the chicken price was only 80 per kg. Pork 140.

Photo9, Knuckle at MakroPhoto : Knuckle at Makro supermarket selling for THB300 per kg or about AUD$12.77.

Photo10, Frozen Indian TenderloinPhoto : Frozen Indian Tenderloin at the enormous Makro supermarket.

Photo11, Aussie BeefPhoto : Aussie beef presented at the upscale Rimping supermarket which provided an astonishing array of food products from all over the world. Angus striploin for THB155=AUD$66 per kg, AACo Rib Eye @ AUD$76 per kg and AACo striploin @ AUD$62 per kg.

A very quick inspection in the Rimping meat, fruit and vegetable area identified fruit and vegetables from New Zealand, Chile, Australia, China, Japan and the USA and lots of lamb from Thomas Foods in South Australia. See two examples below. I must compliment the supply chain managers of this supermarket chain as the products they display are beautifully presented and in excellent condition despite their very long journey from around the world to northern Thailand.

Photo12, Aussie CarrotsPhoto : Aussie carrots from Moffatt in Tarome, Queensland.

Photo13, Aussie SpinachPhoto : Aussie Spinach from Coolibah herbs in Pearcedale, Victoria.

Ethiopia

George Black sent me the great photo below. Just why this butcher is looking so happy is a mystery to me given his rather crude shop conditions but they don’t seem to be bothering him. Perhaps he just enjoyed having his photo taken.

This retail beef establishment is located in a small town in the Tigray province of northern Ethiopia where George is providing consulting services to a livestock project.

Photo14, Etiopia

Dr. Ross | November 14, 2018 at 4:03 am | Tags: beef prices, market report, southeast asia | Categories: Monthly Market Report | URL: https://wp.me/p4BVtG-nOi

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New post September Market Report : S.E. Asian Beef Industry

Dr. Ross posted: "58th Edition : September 2018.

Key Points

Indonesia has broken through the $4 per kg barrier for the first time since May 2017. China prices move higher in the wake of the African Swine Fever outbreak. Vietnamese prices have surged again this month."

Respond to this post by replying above this line

New post on Southeast Asian Beef Market Report

September Market Report : S.E. Asian Beef Industry

by Dr. Ross

58th Edition : September 2018.

Key Points

  • Indonesia has broken through the $4 per kg barrier for the first time since May 2017.
  • China prices move higher in the wake of the African Swine Fever outbreak.
  • Vietnamese prices have surged again this month.

Pic1_Asian Slaughter Steer Liveweight

Indonesia : Slaughter Steers AUD $4.02/kg live weight (Rp10,700 = $1AUD)

Slaughter cattle prices continued to increase during September with the indicator rate moving up to Rp43,000 per kg with a range of Rp41.5 to Rp44,000. Even with a slightly weaker exchange rate, the AUD price has pushed through the $4 level for the first time since May 2017. Despite high levels of imports during July and August (60,000 and 70,000 respectively) the supply of cattle is still not sufficient to satisfy demand. This situation is reinforced by the fact that there are still some feedlots selling short-fed cattle to keep their customers in beef.

September saw about 44,000 cattle imported into feedlots so the peak of supply is over and the market is expected to slowly reduce import numbers up until the end of the year as the bulge in recent imports works its way through the supply chains. The graph prepared by MLA below shows that imports are up slightly when compared to this time last year. It is interesting to note that at this time last year, slaughter steer prices and demand were weak (Rp40,000) and heading for even lower levels (see price graph above) while even with higher levels of imports this year, prices are higher and on the rise. Certainly there are no other factors in the Indonesian market for fresh beef at the moment other than raw supply and demand so perhaps real demand for fresh beef is actually rising. Could this be a general rise in consumption due to population growth and improved buying power or a switch back from Indian frozen buffalo to fresh beef? Or both? Either way it is a very encouraging trend.

Pic2_August Feeder and Slaughter Cattle

Pic3_Wet Market in MalangPhoto : The Pasar Blimbing wet market in Malang, East Java where the prices at this modest stall were a little cheaper than other parts of Java with mixed cuts at Rp100,000 per kg and loin cuts at Rp110,000.

The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) negotiations were formally concluded on the 31st of August 2018. While a great deal was made about the benefits to the live export trade, the reality is a little more sobering. Firstly, the agreement does not come into law until it has passed through the parliaments in both Australia and Indonesia and the timetable for this is optimistically estimated to be about 1 year. See notes from a press release below. Knowing how activities in the Australian parliament don’t always go to plan or schedule, it could easily be 2021 before the deal is actually legally in place and any benefits begin to flow. Under the agreement, the live cattle trade has been granted duty free status (down from 5%) and a 575,000 import quota in year one with an annual increase of 4% until the volume reaches 700,000 in year 6. While the 5% tariff reduction is most welcome, there may not be any industry after January 2019 when importers are finally audited to determine their performance in respect to the Indonesian government 1 breeder to 5 feeder rule. Importers were recently advised that failure to comply would result in the cancellation of their import permits for a period of 12 months. As almost no importers will come even close to complying then it appears possible that the numbers of imports for 2019 could be approaching zero. My experience in Indonesia tells me that this situation will be driven right to the wire at which time the pragmatic politicians, bureaucrats and importers will find a compromise position where the trade will be allowed to continue in some fashion.

“Although IA-CEPA is not far away from being signed, the actual deal will not take effect until both Governments have completed their domestic processes and transposed the agreement into law. As part of this process, enabling domestic legislation will need to be enacted by the Australian Parliament, which will include an inquiry by the Parliamentary Joint Standing Committee on Treaties, as well as changes to various regulations. Similar steps would occur in Indonesia which may take up to a year to finalise.”

Pic4_Bintang Supermarket in Seminyak BaliPhoto : Bintang Supermarket in Seminyak Bali. This popular western style supermarket has a well presented beef cabinet with all product from locally slaughtered Bali cattle. Product quality appeared to be excellent. Beef from Bali cattle tastes exactly the same as meat from other breeds of cattle. Prices were similar to other supermarkets around Indonesia.

Vietnam : Slaughter Steers AUD $4.17 / kg (VND16,800 to $1AUD)

Prices are rising in Vietnam with rates in the north moving much more strongly than the south. 550kg Slaughter steers in the north were selling from Dong70,500 to Dong75,000 while similar cattle in the south were bringing Dong68,500. I have averaged these figures to produce a September indicator rate of Dong70,000. Slaughter bulls and heifers have followed the trend of the steer rates in both north and south.

The stronger market has led to an increase in import levels by about 15% on last year with import totals to the end of August at 132,000 head. This increase has led to the feedlots now operating at about 60% of their capacity which represents a further increase over last month.

Feeder steer rates in Darwin are relatively steady at from AUD$3.00 to $3.05 which should encourage importers to continue their strong buying patterns.

China : Slaughter Cattle AUD $5.61 / kg (RMB 4.94 = AUD$)

Slaughter cattle rates have risen in both Beijing and Shanghai, a movement that was expected as a result of the African Swine Fever (ASF) outbreak. Beijing rates rose to Y27.4 in September while prices in Shanghai have moved from Y26 to Y28 per kg live weight for slaughter steers. These prices are for western breeds of cattle such as Simmental and Limousin crosses. The local native Yellow cattle attract a premium price of Y36 per kg or AUD$7.29 per kg live weight.

Pic5_Chinese Southern Yellow Cattle BullPhoto from the internet : Chinese Southern Yellow cattle bull.

Southern Yellow cattle are one of three breeds of Chinese Yellow cattle, the other two being the Central Plains Yellow and the Northern Yellow breeds. The Southern Yellow breed is clearly Zebu (Bos taurus indicus), the Northern Yellow breed is clearly taurine (Bos taurus taurus), and the Central Plains Yellow breed is intermediate, which means at a glance that the Southern Yellow cattle have high, erect humps, the Northern Yellow cattle have no humps, and the Central Plains Yellow cattle have small humps.

Southern Yellow cattle are small, sturdy animals with good heat tolerance and parasite resistance. They have been used primarily for draft animals, but are now being selected for meat production, as well.

My agents advise that the ASF outbreak is gradually being brought under control with the rate of spread slowing down. China has about half the world’s pig population so the impact of disease control measures including travel restrictions on pigs and pig products in the infected areas has resulted in the price of pork increasing significantly. It appears that many supermarkets have taken this opportunity to reduce the price of beef in order to increase the rates of beef consumption despite the fact that the prices of local slaughter cattle has risen. I assume that the beef being offered at attractive prices is imported frozen product.

Pic6_Map of African Swine FeverMap from Market Intel : showing outbreaks from the first on the 1st of August to 6th September 2018. The latest information I have suggests that there have been a total of 16 separate outbreaks up until the 16th of September.

Philippines : Slaughter Cattle AUD $3.72 / kg (Peso 39.0 to AUD$1)

The slaughter steer and beef prices remain firm with the general economy still surging ahead with rising employment, wages and consumption. 2019 may well see an increase in live cattle imports to the Philippines.

Thailand : Slaughter Steers AUD $3.98 / kg (Baht 23.5 to $1AUD)

Prices have weakened slightly on last month with steers at THB92 and bulls at THB95. This may be an indication that cattle are once again flowing through the Myanmar border now that the flood waters in the east are receding.

Scotland.

I visited Scotland during September and naturally took the opportunity to call in to some butcher shops to see what they had to offer. The shop in the photo below was owned and managed by John G. Renicks (in the photo) who happens to hold the title of “World Scotch Pie Champion 2012”. I am a big pie fan so I tried his pies and they were excellent and well worth his award. Scots like their offal with Haggis still a firm local favourite. Haggis was traditionally prepared using the rumen of a sheep as the casing to hold the mixture of offal, oatmeal, spices, meat, onion and fat. Today these ingredients are enclosed by a large synthetic sausage skin. Despite the fact that the description may not sound particularly attractive, the end product is outstanding and is in fact the Scottish national dish.

Pic7_John RenicksPhoto : John G Renicks, World Scotch Pie Champion 2012 in his Dumfries butcher shop.

Pic8_Scotch PiesPhoto : John Renicks scotch pies.

Pic9_HaggisPhoto : Haggis sells for AUD$34.54 per kg while the price of Fillet steak is A$76.27 per kg (price above is in British pounds per pound). 1 British Pound is AUD$1.81. 1 kg is 2.2 pounds.

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.

September 18 price table

Dr. Ross | October 9, 2018 at 4:24 am | Tags: beef prices, market report, southeast asia | Categories: Monthly Market Report | URL: https://wp.me/p4BVtG-nO4

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