• Live cattle trade volumes in May close to normal pre-virus levels.
• A modest rise in Indonesian demand for fresh beef during Ramadan and Lebaran
• African swine fever still creating havoc with protein supplies in the background
• Darwin feeder cattle prices are back on the rise
SLAUGHTER STEERS $4.12KG LIVE WEIGHT (RP9,700 = $1AUD)
The Muslim festival of Ramadan was celebrated from April 23-May 23 followed by the Lebaran holiday on May 24. Despite the huge disruption caused by the virus, many Indonesians still managed to celebrate – with the most popular way being to enjoy a special meal with family and friends.
Those who prepare the meals try to provide everyone’s favourite family dishes, including (if they can afford it) the more expensive products just like the Christmas dinner in the West. Beef is one of the most sought-after meals so this festival period has always resulted in a rise in beef demand and prices.
This year the increase in demand was present, albeit rather subdued. The result was a slight rise in slaughter cattle prices of about Rp1,000 per kg so the indicator rate for May has edged up to Rp40,000 per kg live weight for a slaughter steer.
The April import total for feeders reached 37,000 head, which was similar to the monthly rates since January (30,000), February (38,500) and March (34,400). Anecdotal evidence is that the May figure is also close to this number. These monthly volumes are very encouraging for future local market conditions as in the past any numbers greater than 50,000 per month invariably resulted in an oversupply followed by a build-up of overfat cattle and the inevitable downward spiral of buyer resistance, discounting and losses.
With an average of less than 40,000 per month offsetting the reduced demand during the pandemic, prices and returns have a much better chance of remaining stable with benefits to both importers and consumers alike. During the one to two-month period following Lebaran, demand for beef is traditionally subdued. I have just been advised by my old friend Robi Agustiar, Indonesian consultant and ex-NT station manager, that 672 tons of Indian buffalo beef has just arrived in Jakarta in the last few days.
This will provide product to the low-end food service sector for a month or so before further supplies arrive from India and Brazil. Movement restrictions associated with the pandemic appear to be easing around Indonesia, at least in a limited way, so restaurants frequented by travellers, such as the many Padang-style outlets, may well begin to contribute to a slow recovery of demand, including the important sales of offal to help offset the cost of the beef carcase.
Darwin feeder steer prices continue their high level of volatility with a rate of around $3.25 at the end of May with even a few quotes as high as $3.40. This follows the wild ride from $3.40 in March to $2.80 and even lower in April. The table below from MLA lists cattle exports by port showing that Townsville has overtaken Darwin as the main live cattle export port for Australia.
VIETNAM SLAUGHTER STEERS $4.74KG (VND15,200 TO $1AUD)
Slaughter cattle prices have remained stable in the local currency, while live shipments continue at levels significantly higher than previous years. Import numbers for April were 16,500 following an average of about 22,000 for the previous three months. Live imports continue to be sourced into south Vietnam from Thailand via Cambodia, which is helping to support the Thai domestic prices.
The majority of Vietnamese stock are sourced from Townsville as they prefer a mix of about 80 percent slaughter and 20 precedent feeder cattle. The market in Australia is extremely fragmented and volatile with a huge number of factors pulling supply and demand in different directions. Some of the latest events of significance include the sudden closure of access to the Chinese market for four large processors, while AMH Dinmore has closed its doors for reasons that I am yet to understand.
On the one hand, these closures have reduced demand, while a generally reduced herd size, rainfall in some areas and strong demand from interstate has resulted in serious shortages of supply of slaughter and restocked cattle. If the net result of this tug of war is stronger prices for slaughter ox and bulls, then this could well result in a significant slowing of the Vietnamese shipments. ASF continues to have a serious negative impact on pork production with plenty of outbreaks, especially in the north.
CHINA SLAUGHTER CATTLE $6.84KG (RMB 4.65 = AUD$)
The yuan has weakened a little against the AUD, while the local price average between Shanghai and Beijing has increased slightly to 31.8 yuan per kg live weight. More wet markets are open in the Beijing area with prices of all the reported items as erratic as usual.
Press reports state that the Chinese economic activity is back to 90 percent of pre-virus rates. Amid all the Covid-19 virus drama, the ASF pandemic has slipped out of the news but is still creating havoc for pig producers across Asia. A worrying new development is the identification of ASF infection in wild pigs on the China/ Russian border, in the North/South Korea border area and also in Hubei province in central China.
Chinese authorities appear to have been quite successful in clearing ASF infection from domestic pig production units but dealing with infection in wild pigs is another problem altogether. Australians know only too well how hard it is to control wild pigs so when they are infected with a killer virus the nightmare is many times worse.
As always, in a crisis, there are lots of losers and some winners. Many of the very large, sophisticated pig producers who would have already been practising high standards of biosecurity as a normal part of their production systems have been able to keep the virus out of their facilities and are now enjoying the fruits of strong production, limited competition and sharply higher prices. If you think that the corona virus is bad, have look at the CV of the cause of ASF, which is a member of the Asfarviridae virus family.
The ASF virus is much more resilient and deadlier than corona:
• It can survive in the environment for many months even after aggressive disinfection efforts
• It can survive in carcases and processed food, such as sausages, even after being cooked and frozen for months
• There is no vaccine or satisfactory treatment
• The mortality rate is close to 100 percent, leaving just enough survivors to spread the infection to others.
PHILIPPINES SLAUGHTER CATTLE $6.36KG (PESO 33.0 TO AUD$1)
Prices of slaughter cattle and beef have remained stable. Most areas of the Philippines are now beginning to emerge from lockdown with restrictions limited to wearing masks and social distancing. Prices of food have remained remarkably stable, so there was no need for the government to step in and enforce official price controls.
THAILAND SLAUGHTER STEERS $4.69KG (BAHT 20.9 TO $1AUD)
Just a slight increase in local prices for slaughter cattle from 95 to 98 baht per kg live weight. The same market forces are in play with the Myanmar border still closed to imports and the Cambodian buyers still active, sourcing export slaughter cattle for southern Vietnam. TQ
Subscribe to Southeast Asian Beef Market Report Ross Ainsworth’s blog seabeefreport.com aims to inform the reader about the beef industry in South-East Asia with particular reference to the live export trade from Australia.
Beef consumers in Asia will, in due course, be the biggest single customer group for Australia. Therefore, it’s essential that the Australian industry has a good understanding of this market maximise its potential.
Finding information in foreign countries is a difficult process for individuals in Australia to achieve. Ross’s experience gives him insights that Australian producers and other industry stake holders can’t easily obtain.