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

Dr. Ross posted: "62nd Edition : January 2019.

Key Points

Concerns over imminent Indonesian import permit problems recede as government takes no action during January. Vietnam and Malaysia have agreed on import protocols for live cattle from Brazil.

Indone"

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New post on Southeast Asian Beef Market Report

January Market Report : S.E. Asian Beef Industry

by Dr. Ross

62nd Edition : January 2019.

Key Points

  • Concerns over imminent Indonesian import permit problems recede as government takes no action during January.
  • Vietnam and Malaysia have agreed on import protocols for live cattle from Brazil.

Asian Slaughter Steer

Indonesia : Slaughter Steers AUD $3.91/kg live weight (Rp10,100 = $1AUD)

The market continues to be depressed by the wall of cattle being presented to the butchers as the 81,000 head imported in October exerts its full influence. Fat steer prices range from Rp39,000 to Rp41,500 with even lower prices for longfed animals. I have used Rp39,500 as the indicator rate for January with expectations that this rate will fall again next month as the October flood continues its slow progress to market. It may take well into March until the October imports are fully eliminated from the feedlots. This depressed market sentiment combined with the seasonal price rises for feeders in Australia has led to a low January import number of close to 30,000. At the time of writing this report in the first week of February, it looks like being a very quiet import month as the monsoon is just in the process of arriving in northern Australia. With major flooding in the cattle port city of Townsville and wet conditions in the top end of the Northern Territory, supply will be limited with logistics severely restricted and prices on the rise. Normally this reduction in numbers would not be a problem but in 2019 Ramadan begins on the 4th of May and ends on the 4th June. Lebaran begins on the 5th of June. Peak demand during this festival period is the last 10 days of Ramadan and the first few days of Lebaran. An average feeding period of 120 days means that feeder cattle need to be imported at the beginning of Febrary to meet the peak market at the end of May. My most recent report of northern Australian feeder prices indicated that AUD$3.25 was about the money but this was just prior to the heavy rainfall events. If the rain continues, this rate could easily pass $3.50 with $4 and easy mark when the drought is finally broken. If February produces the very low import numbers seen in January the supplies available at the end of May will be severely restricted with great pressure for price increases of fresh beef.

It is interesting to note that for the first time in decades, the price of imported live cattle ready for slaughter in Indonesia is now consistently the lowest in the region. And all of the other markets have been importing unlimited quantities of Indian buffalo beef for many years. It seems that importers only have themselves to blame as hugely excessive imports during July, August and October appear to be the primary factor causing the current market pain.

On a brighter note, importers are breathing a sigh of relief as the government seems to be in no hurry to take action against those who have failed to meet their 1 to 5 breeder to feeder import requirement. The best (and most optimistic) advice that I have is that the government won’t act until the individual importer annual import permit allocations have been fully utilized. As I understand it, the majority of importers commenced their annual import permit process in the third quarter of the calendar year, therefore, if the government intends to wait until the annual permit cycle ends before taking action, the majority of importers can continue to operate normally until at least July and possibly as late as September. This outcome no doubt suits the government as it means it will not result in any bureaucratic restriction of imports prior to Ramadan and Lebaran and will also push the decision back to a date after the upcoming general election on the 17th of April 2019. For the first time in Indonesian history, the President, Vice President and members of the People’s Consultative Assembly will all be elected on the same day by more than 190 million eligible voters. Northern producers can also relax as this delay until the 3rd quarter also avoids any drastic reductions in demand until after the 2019 seasonal marketing cycle. As the national herd forecast shows below, total numbers will be at their lowest from 2019-2021 so producers will be shielded from any potential reduction in imports to Indonesia during 2020 by a severe shortage of supply regardless of whether the drought breaks or not.

National Cattle Herd

Photo 1Photo : Frozen Buffalo beef @ Rp80,000 per kg (AUD$7.92) in Giant supermarket Jakarta. Vietnam : Slaughter Steers AUD $4.36 / kg (VND16,500 to $1AUD)

Strong demand and supply continue across Vietnam as the Tet New Year festival period approaches (2nd to the 10th February). I have lifted the indicator rate for slaughter steers from Dong71,000 to Dong 72,000 this month to recognise the strength of the higher priced northern market. January saw the 100,000 feedlot capacity increase from 70 to 80% as importers stocked up for the holiday period.

The significant news for this month is that negotiations are now well advanced to allow Vietnamese importers to receive live cattle from Brazil. My sources suggest that while there is still some final processes required to complete the negotiations, the first shipment might arrive as early as mid 2019. Similar negotiations with Malaysia could reduce the logistics burden of one country taking large shipments at once as two or three port discharges for very large vessels is not a deal breaker.

Photo 2Happy New Year. Photo 3Photo taken by Lach MacKinnon just south of the Parana river in southern Brazil : feeder steers that would do the job nicely in Vietnam or Malaysia. China : Slaughter Cattle AUD $5.39 / kg (RMB 4.87 = AUD$)

There has been little change in slaughter cattle rates during January despite the red meat market disruption caused by the ongoing African Swine Fever (AFS) outbreak. As Simon Quilty reported in mid January, the full impact on pig numbers will take quite some time to work its way through the production system so it might be 2020 before the national pig population hits the bottom and exerts maximum disruption on the meat markets both in China and elsewhere around the world.

The recent NACC shipment of slaughter cattle from Port Alma in Queensland to northern China was perfectly timed to provide product for this year’s Chinese New Year festival which runs from the 5th to the 19th of February 2019. It is a timely demonstration of how the difficult and complex export health protocol can actually work in northern Australia as these cattle were delivered to northern China where the weather is too cold for the Bluetongue insect vectors to survive.

Changes still need to be made to the protocol to ensure that trade can continue in a normal fashion i.e. not only is there a requirement that the entire shipment is processed in 14 days but Quarantine then requires that the abattoir holding yards to be empty for 30 days before the next shipment can arrive. Clearly these issues are a restriction on trade rather than a disease risk management measure.

When China decides to remove these trade restricting factors from this protocol the producers, exporter and ports around Australia will be kept very busy with the demand for live cattle. With the initial focus being on slaughter cattle, Port Alma is very well placed to provide an excellent service to this specialist trade.

Photo 4Photo from George Black : Chinese street market in Rongcheng, Shandong Province, northern China. Temperatures at zero or below so no need for refrigeration. Photo 5Photo from George Black : Aussie “Four Brothers” brand (Teys Brothers) vacuum packed Shin Shank in a Rongcheng supermarket selling for Yuan104 or AUD$21.35 – not bad for shin beef! In the same supermarket Aussie cube roll was selling for $99 per kg. Photo 6Another great photo from George Black in northern China where their big black donkeys are in high demand for their beef and their hides once they have finished their duties as draft animals. Their meat sells for prices similar to beef at around AUD$12 per kg. The hides are highly prized for their medicinal uses. Philippines : Slaughter Cattle AUD $4.40 / kg (Peso 37.5 to AUD$1)

The peso rate for slaughter cattle has risen this month to Peso165 per kg live weight (from 157 last month). My agent in the Philippines tells me that this is due to simple lack of supply as buyers continue to show strong demand for fresh beef while the local cattle herd simply can’t keep up. The ongoing strength of the Philippine economy is no doubt the major factor driving this.

Thailand : Slaughter Steers AUD $4.07 / kg (Baht 22.6 to $1AUD)

Thai slaughter cattle prices remained fairly steady during January with the increase in the AUD rate above mainly driven by the stronger Baht.

Observation.

While I was back in Australia for a Christmas break I visited a large number of supermarkets to see what was on offer in their beef departments. After observing about 20 supermarkets focusing on Coles and Woolworths it seemed to me that there was a huge difference in the presentation of the beef on display. In almost every case, Woollies appeared well stocked and presented while Coles were almost always understocked, messy with generally a lesser volume and range of product. It seemed to me that the management at Woolworths were carnivores while those at Coles were vegetarians but of course this is a purely subjective observation on my part. Have a look for yourself and make your own judgement.

Photo 7Photo : Woolworths in Darra, a suburb of Brisbane. Photo 8Photo : Coles in Jindalee, a suburb of Brisbane (not far from Darra). Photo 9Photo : Woolworths in Moe, country Victoria. Photo 10Photo : Coles in Moe, country Victoria. 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.

January 19 price table

Dr. Ross | February 11, 2019 at 7:07 am | Tags: beef prices, market report, southeast asia | Categories: Monthly Market Report | URL: https://wp.me/p4BVtG-nPj

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

Dr. Ross posted: "61st Edition : December 2018.

Key Points

Oversupply in Indonesian feedlots continues to push slaughter prices lower with the annual import total reaching 545,000. The AUD is weaker against all our Asian customer currencies helping in a small way to o"

Respond to this post by replying above this line

New post on Southeast Asian Beef Market Report

December Market Report : S.E. Asian Beef Industry

by Dr. Ross

61st Edition : December 2018.

Key Points

  • Oversupply in Indonesian feedlots continues to push slaughter prices lower with the annual import total reaching 545,000.
  • The AUD is weaker against all our Asian customer currencies helping in a small way to offset the sharp rise in feeder cattle prices in northern Australia.

english_ graph dec 2018

Indonesia : Slaughter Steers AUD $3.88/kg live weight (Rp10,300 = $1AUD)

The impact of the very large number of feeders imported in August (70k) continues to depress the already oversupplied slaughter market with discounts pushing prices further downwards. This oversupply will soon be compounded by the output from the massive 81,000 head of feeders imported during October. The price range for slaughter steers in December starts with Rp41.500 per kg live weight as the highest quote while Rp38,000 was the lowest that I have heard reported. I have used Rp40,000 as the indicator rate for December. The traders that I have spoken to advise that even the lowest prices have not been able to move as many of the longfed animals as they would have liked. With a massive bulge of finished October imports heading for this very weak market, the slaughter price appears set for further punishment through January and February.

This selling pressure might account for a few major discounts seen in some Jakarta supermarket chains this month. See photo below of knucke reduced by more than 30% from Rp15,795 to Rp10,990 per 100 grams.

photo 1Photo : discounted knuckle and topside. 45,000 head of feeders were imported in November with 40,000 delivered during December bringing the total imports for the 2018 calendar year to 545,000 or an average of 45,400 per month. Given today’s domestic market signals for fresh imported beef, this number appears far too high with a monthly average figure between 35k and 40k looking much more sustainable.

I spent a few days holidaying in southern Lombok recently and was surprised by the large numbers of buffalo grazing extensive pasture areas along the southern beaches. Southern Lombok was not severely affected by the recent earth quakes as the northern regions so tourism is still quite strong. While there is a great deal of new tourist accommodation being constructed, the majority is very sensibly located on tsunami-safe higher ground as can be seen in the photo below.

photo 2Photo : southern Lombok has very large numbers of buffalo grazing on the pastures and crop stubbles of the coastal plain while the tourist developments are located safely on the hillside. The audits of the importer performance against the 1 breeder to 5 feeder requirement have been completed by the government which simply needed to look back at the import permits which they issued for feeders and breeders for each importer entity during the last 2 years. Only one small new entrant to the live import business is likely to have satisfied the formula so everyone is now waiting of the government to announce their response which will be big news when it breaks.

Feeder cattle prices moved sharply higher in northern Australia during December with rates for steers delivered Darwin rising from around $3.05 to $3.25 per kg live weight. Market observers tell me that this is mainly a function of a sudden shortage of supply which appears to have caught the market a little off-guard rather than any increase in demand. The sudden drop in the AUD against all of our Asian customer currencies is no doubt welcome but unfortunately for Indonesia will not be sufficient to offset the rising CIF price which will need to be paid in January and early February to allow feedlots to stock up for the peak annual demand of Ramadan (May) and Lebaran (5-10th June).

Vietnam : Slaughter Steers AUD $4.30 / kg (VND16,500 to $1AUD)

All slaughter cattle prices across Vietnam remain the same strong values as last month with the change in the AUD figure above entirely due to the weakening AUD$. Fat steers in the south are selling for 70,000 VND while similar steers in the north can attract up to 76,000 VND.

December shipments delivered cattle to all areas of the country including central Vietnam with inventory at the end of December increasing to around 70% of the 100,000 head national capacity. The 2019 Tet national holidays falls from the 2nd to the 10th of February so exporters and importers will probably have a busy January ensuring stocks are adequate for Vietnam’s cashed-up and food-loving population. With Vietnam’s economy one of the strongest in the world, the prospects for ongoing business in 2019 are looking bright. In fact, all the S. E. Asian economies are standouts when compared with the forecast performance for the rest of the world.

GDP Growth Estimates. Obtained from various resources, IMF, World Bank etc.

gdp growth.pdf

The Economist Intelligence Unit has recently published its GDP growth forecasts for 2019 predicting that all of our customer countries are expected to be amongst the best performers as shown on the graphic below.

photo 3

China : Slaughter Cattle AUD $5.56 / kg (RMB 4.90 = AUD$)

Rates for slaughter cattle in Beijing and Shanghai were steady during December. Once again, the slight change in the AUD figure above is mainly due to the weakening AUD. My agents report that although there have not been any major moves in retail prices there have been significant price increases in the wholesale beef sector especially for low quality product. Could this be a result of the major slowdown in the grey trade, especially from India, as reported recently by Simon Quilty? If so it may soon work its way through the supply chain to push retail prices higher.

During December I visited south west China, flying into Kunming then sailing down the Mekong river through Myanmar and Laos until reaching the Golden Triangle where where I left the boat in northern Thailand. I will be writing a separate article on this fascinating adventure in the next few weeks.

While in Kunming I naturally visited some beef markets including the largest wet market in this city of 10 million people. What an eye-opener. The wet market was extremely clean, orderly and well managed with an enormous array of food products for sale. Pork is of course the main meat available but beef is well represented with comprehensive displays of meat and offal as seen in the photo below. One product commonly sold here which I don’t usually see in wet markets in other parts of Asia is large cuts of salted beef. This product was selling for Y98 per kg ($20 per kg). Kunming is latitude 24 degrees north so the weather is cool and the wet market stays open all day with product surviving well in the open air.

The pork areas were huge but many tables were empty. Unfortunately, due to translation difficulties, I was unable to determine if this was a result of the African Swine Fever outbreak or other factors. See Simon Quilty’s detailed discussion on the ASF situation which suggests that there could be a lot more market disruption to come.

photo 4Photo : my travelling companion Mouse Sullivan, an Aussie expatriate from Bali inspecting the beef on offer. Fresh beef was selling for Y68 per kg which is in between the prices I have recorded for Beijing and Shanghai. Note the little blue square on the bottom left corner of the sign indicating that this business (as they all did) was able to process your purchase digitally using Alipay (blue square) and WeChat (green) on your smartphone. photo 5Photo : Supermarket in Kunming providing a modest presentation of fresh beef and offal at prices in the same range as those reported from Beijing and Shanghai. Philippines : Slaughter Cattle AUD $4.19 / kg (Peso 37.5 to AUD$1)

The Peso price of slaughter cattle remains the same this month (about 157 Peso per kg live) with the large increase in the AUD price above due to the weakening AUD$. This relative strength of the Peso, the forecasts for very strong GDP growth and the continuing strength of the local cattle prices should give Australian live cattle exporters further encouragement that this market may once again become a significant customer for Australian feeder cattle in the near future.

Thailand : Slaughter Steers AUD $3.97 / kg (Baht 23.3 to $1AUD)

Thai slaughter cattle prices have weakened during December with steers selling at THB91 while bulls were THB94 per kg live weight.

After leaving the Mekong river boat in northern Thailand we travelled to Bangkok and visited some large supermarkets where this “The Beef Master” restaurant and retail butcher combination was doing a roaring trade in the MBK Centre. Their advertising explains that the beef is derived from imported Australian cattle which are fattened under the best conditions then processed for maximum eating quality including a final 55day dry aging for some cuts. The beef looks great and tastes good too.

photo 6Photo : Prices for this Australian live import sourced product are steep, starting at the top with 55day dry aged “Black Label” Tomahawk @ Bht2420 per kg or AUD$103.86. Non dry aged Tomahawk @ Bht1650 or $70.82, T-bone @ Bht1340 or $57.51, Tenderloin @ Bht2050 or $87.98, Rib Eye @ Bht1690 or $72.53 and striploin @ Bht1375 or $59.01. photo 7Photo : Their restaurant menu provides some reasonable prices with the more expensive products cut to order. Someone had taught the chefs well as the final eating experience was excellent. It is also possible to buy a cut from the butcher shop and have the chefs cook it for you on the spot for an additional charge of $4.70. These figures are converted to AUD$ 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.

english december 18 price table

Dr. Ross | January 18, 2019 at 8:42 am | Tags: beef prices, market report, southeast asia | Categories: Monthly Market Report | URL: https://wp.me/p4BVtG-nPc

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