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

Dr. Ross posted: "60th Edition : November 2018.

Key Points

Indonesian prices continue their downward trend with further falls likely. Lesser quality Aussie frozen beef can retail in Indonesia for the same price as Indian buffalo beef. China live cattle prices remain"

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New post on Southeast Asian Beef Market Report

November Market Report : S.E. Asian Beef Industry

by Dr. Ross

60th Edition : November 2018.

Key Points

  • Indonesian prices continue their downward trend with further falls likely.
  • Lesser quality Aussie frozen beef can retail in Indonesia for the same price as Indian buffalo beef.
  • China live cattle prices remain firm while fresh beef prices are climbing.
  • Vietnam and Philippines slaughter cattle prices on the rise

Asian Slaughter Steer Nov 2018

Indonesia : Slaughter Steers AUD $3.85/kg live weight (Rp10,650 = $1AUD)

Prices for slaughter steers have slipped again this month with the indicator rate falling to Rp41,000 per kg farm gate. The general opinion around the market is that further declines are likely given the large feedlot inventories and static demand. The current increased slaughter cattle supply is a result of the exit from the feedlots of finished cattle imported in July (60k) and August (70k). These numbers were well above the previous monthly averages as importers needed to restock following the strong sales volumes during Ramadan and Lebaran. Importers are now faced with an increasing number of long fed cattle on hand and an oversupplied market place bent on pushing the price down even further. While only a moderate 44,000 were imported in September, the October imports totalled just over 81,000. Given that an outflow from 60k and 70k monthly import numbers has resulted in an oversupply situation, the market reaction to the presentation of 81k finished cattle to the butchers is likely to be very ugly result. The Indonesian slaughter cattle market is particularly unforgiving for long fed cattle as butchers start discounting as soon as cattle pass their fat depth maximum levels (generally around 10mm or less depending on individual butchers). This trigger level is relativley low in comparison to Western values as the Asian customer hates the idea of buying fat on their fresh meat. Fresh meat is sold almost fat free with the fat sold as a separate item (see photo below). Every day long-fed cattle remain in the feedlot, they cost more and are worth less as their discount for fat thickness increases.

Photo1_Beef Section in Pelaihari Wet MarketPhoto : This table in the beef section of the Pelaihari wet market (South Kalimantan) sells only fat and offals. This month I had the opportunity to visit the wet market in Pelaihari where the very friendly butchers were happy to tell me about their business. At this market (the main one in the city of about 250,000 people) 10 butchers sell around 10 carcases per day with the cattle sourced locally and from Java with origins of the cattle from both Australia and locally produced animals. Prices of beef were remarkably similar to most other Indonesian markets that I have visited with lean fresh product selling for Rp130,000 per kg. The fat that is trimmed from carcases is sold at a separate table for around Rp60,000 per kg.

In the photo below, the butcher is selling frozen beef and offal which he explained comes from a mixture of Indian and other sources including Australia. The price of the frozen beef cuts was Rp100,000 per kg regardless of its source. Indonesian frozen beef importers are able to source and supply lower quality Aussie beef to Indonesian butchers at a rate that allows them to retail it at the same price as Indian buffalo beef.

Photo2_Pak Esnawan Inspecting Frozen Beef in Pelaihari Wet MarketPhoto : Pak Esnawan inspecting frozen beef and a block of frozen trachea in Pelaihari wet market. Frozen beef souced from Spain is once again available in Indonesia at rates only slightly less than product sourced from Australia.

Photo3_Spanish Frozen BeefPhoto : Spanish frozen beef currently available for sale in Indonesia. Falling feeder prices are not the only problem facing importers as their 1 breeder for 5 feeder commitment will be finally audited during December. The simple fact is every major importer will fail the audit. The penalty, set by the government some time ago, is that those who fail to comply will have their import licenses suspended for a period of 12 months which, on the face of it, would mean that there will be almost no imports during 2019. This outcome would be a disaster for the government as beef and cattle prices across Indonesia would go through the roof while national supplies of fresh beef would decline to around half of the current volumes. The public outcry would be loud and unpleasant as the last of the imported cattle from December would run out just before Ramadan which commences on the 5th May 2019. Such a scenario is totally unacceptable on political, religious and social grounds so a compromise must be found and quickly. The bottom line is that importer compliance with the 1 to 5 import policy is financially and logistically impossible so just how the government will manage to resolve this dilemma without either losing face or collapsing fresh beef supplies just prior to the peak demand period of the 2019 religious festivals will be a fascinating process to observe.

Photo4_Pelaihari ButcherPhoto : This Pelaihari butcher didn’t waste much capital on his chopping blocks. Vietnam : Slaughter Steers AUD $4.14 / kg (VND16,900 to $1AUD)

Slaughter cattle prices are rising across the board with HCMC steers selling for Dong70,000, bulls to D74k and heifers to D67k. In Hanoi prices are even higher with steers and bulls climbing to as high as D76k while heifers have lifted to D66k. Feedlot capacity remains at about 60% of a potential 100,000 head. This 100k excludes the huge facilities that have recently closed down. The steadily rising prices may well be a result of the new reset of the supply and demand equilibrium following the demise of the two largest feedlot companies that had been destabilizing the market for several years during their unsuccessful attempts to achieve viability.

The Binh Ha company, one of the largest Vietnamese feedlot operations, closed down recently following allegations of financial irregularities. The project was associated with the Bank for Investment and Development of Vietnam (BIDV).

Photo5_ Photo from Vietnamese PressPhotos from the Vietnamese press : One of Binh Ha’s several large feedlots now closed down. Photo6_Spanish Beef Producers

Spanish beef producers have recently been promoting their product in Hanoi and Ho Chi Minh City, with 4 Spanish abattoirs currently holding licenses to export beef to Vietnam. The Spanish officials promoted the product as high quality, comparable to beef imported from Australia, the USA and Canada.

Photo7_Photo from the Internet about Spanish BeefPhoto from the internet : Spanish beef for sale in Vietnam. China : Slaughter Cattle AUD $5.53 / kg (RMB 5.02 = AUD$)

Slaughter cattle prices have risen slightly although the AUD price above has declined a little since last month due to fluctuations in the exchange rate. Fresh beef and chicken prices have recorded rises in both Beijing and Shanghai with the largest movement in Shanghai (+5%). My agents advise that this is due to a combination of the normal seasonal rises as well as some impact from African Swine Fever (ASF). The ASF outbreak continues to spread with a total of 80 confirmed outbreaks as at the 26th of November. All the major pig producing regions are now infected and the 4 largest metropolitan areas are also infected : Beijing, Tianjin, Shanghai and Chongqing.

The disruption in the flow of pigs and pig products is magnified by the official practice of not only stopping the movement of pigs and products in the infected region but also in all neighbouring regions.

Another very concerning event has been the confirmation of ASF in a wild pig in the north east of China. This has the potential to make eradication virtually impossible leading to a situation where the disease becomes endemic throughout China which is a shocking prospect given that they have the largest pig population on earth.

Authorities have been able to confirm that the cause of the spread of disease was feeding of kitchen scraps to back yard pigs in 23 cases while movement of infected animals was identified as the cause in 13 cases.

The Chinese Lunar New Year falls in February 2019 when demand for food generally and pork in particular spike. The northern winter is trationally associated with increased consumption of meat products so the dynamics of the demand and supply equation for pork, chicken and beef are likely to be seriously tested in the coming months.

Rabo bank reported that during the first nine months of 2018, China’s official imports of beef increased by 40% year-on-year with strong growth expected to continue into 2019. While chilled and frozen been can be imported in virtually unlimited quantities to supply China’s needs, these imports cannot satisfy the demand for fresh beef from locally slaughtered cattle. This gives Australia a virtual monopoly on the supply of live cattle because freight is such a huge part of the delivery cost and all other sources of suitable live cattle are too far away. When China finally modifies its import protocol to facilitate a logical and efficient import process the massive new demand for Australian live cattle will change our industry for ever. Live exports of one million head per year would not even go close to replacing the recent decline in China’s domestic slaughter cattle supplies, not to mention the ever increasing levels of percapita consumption.

Photo8_ MapMap : Confirmed cases (red dots) against pig densities. Source OIE/USDA. Last week, Chinese tourists from Chengdu in Sichuan province were found to have brought sausages into northern Thailand which were subsequently found to be infected with the ASF virus.

Given that more than 120 million Chinese tourists take a foreign holiday each year with S. E. Asia their favourite destination, it seems likely that it is only a matter of time before ASF is spread to China’s neighbours in South East Asia and potentially much further afield. No doubt the Australian quarantine service are on red alert at entry points across the nation.

Philippines : Slaughter Cattle AUD $4.11 / kg (Peso 38.2 to AUD$1)

The good news from the Philippines just keeps on coming with live cattle prices up slightly again to P157 per kg live weight. My agent reports a wonderful year for the country with political stability and a lack of natural disasters and improved infrastructure providing rising employment and consumer spending power. The good seasons have provided the markets with a full range of food products with consumers spending with confidence.

Thailand : Slaughter Steers AUD $3.97 / kg (Baht 23.9 to $1AUD)

Thai slaughter cattle prices have weakened a little with steers selling at THB93 while bulls are THB96 per kg live weight.

Photo9_Stall in Mekong RiverPhoto : This stall in the Mekong river port town of Chiang Saen in northern Thailand has a well presented selection of fresh beef and offals. Beef here is selling for THB300 per kg which is considerably higher than the major metropolitan wet markets. My daughter Pippa was in the UK during November and took this photo at the Brooks Butcher and Deli in Kensal Green, North London. A magnificent display of product with prices ranging from AUD $70 for free range Ribeye, $69.79 for 30 day aged Scottish sirloin, $19.35 for oxtail and $21.10 for beef short ribs and grass fed feather blade steak.

Photo10_Brooks Butcher

My sister Tracey was in France recently and took this photo of frogs legs in an upscale supermarket. 4 Euros per kg converts to about AUD$6.30 per kg.

Photo11_Frog Legs in France Supermarket

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.

November 18 price table

Dr. Ross | December 12, 2018 at 8:28 am | Tags: beef prices, market report, southeast asia | Categories: Monthly Market Report | URL: https://wp.me/p4BVtG-nOD

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Pastoral Market Update – September 2018

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September 2018

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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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