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

Dr. Ross posted: "63rd Edition : February 2019. Key Points October imports still having strong negative impact on Indonesian market. The Philippines slaughter cattle prices continue their meteoric rise. Northern Territory feeder prices collapse as wet season fails. "

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February Market Report : S.E. Asian Beef Industry

by Dr. Ross

63rd Edition : February 2019.

Key Points

· October imports still having strong negative impact on Indonesian market.

· The Philippines slaughter cattle prices continue their meteoric rise.

· Northern Territory feeder prices collapse as wet season fails.

Asian Slaughter Feb 2019

Indonesia : Slaughter Steers AUD $3.90/kg live weight (Rp10,000 = $1AUD)

Overweight cattle from October 2018 imports continue to push the market lower as buyers resist low yielding slaughter animals and importers reduce their rates even further to encourage sales. The indicator rate for February is Rp39,000 down Rp500 from last month. A further frustrating consequence of this slow output is that imports from subsequent months are now stuck in the que behind the remaining October cattle with November imports (46,000) likely to also trending overweight by the time they finally reach the abattoir. Forecasts for March suggest prices will move even lower although this is likely to represent the bottom of the cycle as the October imports should have all been slaughtered by the end of this month.

Official import numbers are now available for January with a little over 40,000 entering the feedlots. Unofficial figures for February indicate that despite the major disruption associated with the Townsville and western Queensland flooding, total imports for February are likely to be close to 40,000. This relatively high number, considering the difficult weather conditions is good news for importers and Indonesian consumers as these cattle will form the basis of the feedlot output for the peak demand period of Ramadan and Lebaran (4th May – 10th June). Given that imports during March onwards will be leaving the feedlots during the traditionally low demand post-Lebaran period, it seems likely that importers will keep their monthly volumes in the 30,000 to 45,000 range as the memory of excessive monthly imports last year are still fresh in their minds.

The signing of the Indonesia-Australia Comprehensive Economic Partnership Agreement (I-A CEPA) on the 4th of March is generally good news for the future of the industry with the elimination of the 5% tariff most welcome. Unfortunately, importers businesses are so far into the red that a 5% life-line probably doesn’t appear a lot to cheer about knowing that sale prices are fixed by the government.

As of the 8th of March, the rates for feeder steers delivered Darwin had crashed to around AUD$3 per kg live weight, representing a greater than 10% fall during late February as a direct result of the failure of the Northern Territory wet season. In the short term, the northern Australian cattle industry is in very bad shape with massive losses of cattle and infrastructure from the north Queensland floods now combined with the Northern Territory staring at a possible annual wet season failure for the majority of the cattle breeding areas. Feeder cattle are already being presented to the market in large numbers at cheap rates with buyers hard to find at any price. Industry observers suggest that the current situation represents the worst wide spread seasonal failure in living memory.

Photo 1_Feb 2019

Photo : I was late (11am) visiting this market in Yogyakarta earlier in February so there were only a few stalls still open. Prices were the same as elsewhere in Indonesia, Rp130,000 for the best cuts, Rp110,000 for lesser cuts and Rp60,000 for skin including the face.

Photo 2_Feb 2019

Photo : Hind quarter beef at the Pasar Modern wet market in BSD City, Jakarta, Rp130,000 per kg.

Photo 3_Feb 2019

Photo : knuckle (centre) in Giant Supermarket in BSD City, Jakarta, Rp199,000 per kg or AUD$20.

Vietnam : Slaughter Steers AUD $4.36 / kg (VND16,500 to $1AUD)

Prices remain firm despite the end of the Tet festival with feedlots back down to about 70% capacity. 500kg Steers in the south are bringing Dong 68-70,000 while similar cattle in the north attract D71-76,000. Bulls in the south are D73 to 74,000 while those in the north bring D73-76,000. I have kept the indicator rate steady at Dong72,000. ASF has recently been officially reported in a number of sites in Vietnam. This disease has the potential to create havoc in the local pig production industry as it has already done in neighbouring China.

Photo 4_Feb 2019

Photo : sorry about the quality of this photo but I thought the content was very interesting. This Vinmart, Ho Chi Minh City Supermarket product, slaughtered by Vissan, is labelled with “theo tieu chuan ESCAS” which translates to “according to the ESCAS standard”, something I have never seen on a label before. The knuckle on the left is selling for Dong302,000 or AUD$18.30 per kg.

Vietnamese are very strong on internet beef sales and certainly make an impressive presentation with lots of discounts to attract buyers.

Photo 5_Feb 2019

Photo from the internet : Knuckle selling at discount prices on the internet – Dong 270,000 per kg. See one of the many websites below.

http://www.sieuthithitbo.net/thit-bo-uc/nac-dui-go-bo-uc-knuckle

China : Slaughter Cattle AUD $5.56 / kg (RMB 4.80 = AUD$)

Slaughter rates in RMB remain relatively stable with currency fluctuations creating the majority of the AUD price increase noted above. African Swine Fever (AFS) continues to be a huge factor in the Chinese red meat industry with the full impact yet to be reflected in the pig supply chain.

The graph presented by Rabobank below shows how unofficial import volumes have remained fairly static over the last 4 years while tonnage of official imports has risen sharply. Despite the total volume of imported product rising 400% from about 500,000 tons in 2012/13 tons to 2 million tons in 2018/19, the price of live slaughter cattle continues its steady climb. See slaughter price graph at the top of this report showing how steer prices have been rising strongly in the face of these massive increases in processed beef imports. My interpretation is that this is demonstrating that fresh, locally slaughtered beef is still an entirely separate market segment with its price driven by supply and demand of locally available slaughter cattle rather than the competition presented by imported processed beef. With local cattle production static, live imports severely restricted (by health protocol issues) and consumer demand constantly rising, live slaughter cattle prices are likely to continue to increase.

In the face of rising beef prices, the Chinese government first move was to allow official imports to begin with Australian and other suppliers commencing imports in 2013. Other import sources were then permitted including Europe, USA and South America. Despite the reports of government crackdown on grey channel imports it appears from the graph below that volumes remain at more than 600,000 tons. After beef imports increased from virtually nil to more than 2 million tons over the last 10 years, Chinese beef prices remain amongst the highest in the world. Check the prices for wet and supermarket beef in the table attached to this report. What is their next move? Relax restrictions on live slaughter cattle imports? 1 million live slaughter cattle imports would only represent an approximate equivalent of 200,000 tons of processed product, less than 10% of current beef imports.

Photo 6_Feb 2019

Philippines : Slaughter Cattle AUD $4.60 / kg (Peso 37.0 to AUD$1)

Local slaughter cattle prices have risen again this month from Peso 165 to Peso 170 per kg live weight. This rise combined with the strengthening Peso against the AUD has rocketed the AUD price to $4.60, second only to China. This phenomenal rise only began in late 2017 when the Philippines was consistently the lowest price in the region at less than $3 per kg. My agent reports that this is a simple matter of a shortage of supply from the domestic herd combined with strengthening demand from consumers enjoying solid economic growth combined with general social and political stability not seen in the Philippines from a very long time.

Thailand : Slaughter Steers AUD $4.38 / kg (Baht 22.4 to $1AUD)

Prices have risen sharply for both bulls and steers this month. Bulls are now 100Baht while Steers are selling for 96Baht per kg live weight. I have used 98 Baht as the indicator price for this month, up from 92 last month.

Thailand is one of the most popular destinations for Chinese tourists which is great for their economy on the one hand but presents a huge risk factor in the context of African Swine Fever.

Between 21st January and the 3rd February, the Australian government conducted a trial on pork products that were seized or declared by incoming passengers at Sydney and Melbourne airports and mail arriving through the Sydney and Melbourne mail depots.

Of 162 seizures, 283 samples were tested for ASF with 40 samples positive for ASF virus fragments. Even more frightening, two samples were also positive for Foot and Mouth Disease virus.

If this is the situation in Australia, imagine how much infected product is entering China’s next door neighbours via their tourists and business travellers not to mention cross border smuggling which is a popular local pastime.

George Black is back in Ethiopia.

Photo 7_Feb 2019

Photo from George Black : Boran Bull in a northern Ethiopian feedlot.

Photo 8_Feb 2019

Photo from George : Boran quarters in the chiller

Photo 9_Feb 2019

Photo from George : Cattle and goat butcher shop in Ethiopia.

.

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.

February 19 price table

Dr. Ross | March 13, 2019 at 8:47 am | Tags: beef prices, market report, southeast asia | Categories: Monthly Market Report | URL: https://wp.me/p4BVtG-nPD

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Pastoral Market Update – January 2019

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January 2019

Dear subscriber

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 January 2019

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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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