ROBUST Asian demand has pushed first quarter live cattle exports to a 13 per cent year-on-year increase, with 284,000 head leaving our shores from January until now.
Indonesia remains the largest buyer of both feeder and slaughter cattle, taking 147,000 head, a massive 48 per cent more than for the same period last year, Meat and Livestock Australia reports.
With stations in the north out mustering earlier that usual due to the shorter wet season, greater numbers has seen an easing in prices this month, however they are coming off very high levels and remain well above the same time last year.
Northern agents estimate prices have been 30 to 40 per cent higher year-on-year, up until the past four weeks, where an absence of quotes on cattle, while exporters wait on the next round of permits from Indonesia, has created some uncertainty.
Elders Northern Territory livestock sales manager Paul McCormick, Katherine, said there was an underlying confidence given the tight supply but the fact there was currently no automatic outlet for April cattle was creating some concern.
According to MLA, live export feeder steers delivered to Darwin are currently receiving around 350 cents per kilogram liveweight, which is 30c below where they peaked in February, but still 100c above where they averaged this time last year.
Feeder steers delivered to Townsville have followed a similar trend, currently making 290-300c/kg lwt.
Mr McCormick said the money the live trade price lift had pumped into the north was creating a healthy mix of debt reduction, increased investment in infrastructure like crushes, fences and watering gear and a little bit of herd expansion.
It had also fed through to the property market, where there was currently ‘a bubble of activity involving large corporate interests through to smaller holdings’, he said.
Which is why ongoing talk of capping live cattle export numbers is frustrating pastoralists.
Northern Territory Cattlemen’s Association’s Tom Ryan said most NT properties were completely reliant on the live export market.
And the value extended far beyond the station - live trade effectively underpins economies in the northern half of Australia.
He said there was huge demand for both Australian live cattle and boxed beef at the moment and some pastoralists are were now able to choose their most profitable market option.
“The current cycle is being driven by short supply rather than lack of demand,” he said.
“Two years ago the industry saw widespread drought conditions force a huge number of cattle onto the market and the processing sector was very profitable during this time. “Australia needs both the processing and live export sector to be healthy and robust but the low national herd is currently driving high competition in both sectors for what saleable cattle are available.”
The idea of a cap as a means to protecting meat processing jobs in Australia is also gaining little traction amongst economists.
They point that despite the attention the increase in live cattle trade has received, the lift had only been slight.
Live cattle exports accounted for 13 per cent of Australia’s overall cattle turnoff last year.
Traditionally, that figure has sat around 9pc but due to fast-growing demand from Indonesia, Vietnam and other emerging markets, MLA has forecast this year it will again be higher at 12pc.
Professor of Agribusiness and Value Chains at the University of New England Derek Baker said: “It remains small numbers and a specific set of cattle - lightweight feeder cattle that will be fattened in South East Asia.
“We have never really been able to ascertain whether our domestic systems can accommodate those cattle long term,” he said.
Both Prof Baker and Mecardo market analyst Matt Dalgleish said it was unlikely any increase in live exports would have a dramatic enough effect on local processing to make it no longer viable.
They said the two channels should, and could, co-exist peacefully.
“Robbing farmer peter to pay meat work Paul isn’t a long-term solution nor will it create a robust and diversified beef industry,” Mr Dalgleish said.
Prof Baker said most beef industry commentators seemed to have enthusiasm for the future of exports.
“In the long run, processors should be able to compete with live trade in terms of what they pay for cattle,” he said.
“The fact AACo has built a new processing plant near Darwin shows they see possibilities.”
Ban equals producers out of business: Market analyst
MARKET analysts Mecardo say a ban to live cattle exports could see an increase of 800,000 to 1.4m head of cattle processed domestically.
“The most recent occurrence of that size of supply coming onto the market was the drought-induced turnoff of the years leading up until 2015 that saw local prices deviate from the export price by a 40 to 100 per cent discount,” analyst Matt Dalgleish said.
“In normal circumstances, the Eastern Young Cattle Indicator will track the 90CL reasonably closely so that gives a baseline figure for what may happen to local prices under a total export ban.”
During that period, the extra turnoff was able to be accommodated by strong demand from the US so processors were able to run at capacity and offload the product for a good price.
Mr Dalgleish said that situation was unlikely to be repeated if a live export ban was put into place this season as the US was now satisfied with its cold storage levels.
“The export market for beef is reasonably diversified so in time the extra supply caused by a live export ban could be worked through but there would be flow-on effects causing local price adjustments for producers that would be costly and unexpected,” he said.
“During the live export suspension ban to Indonesia, which lasted only five weeks, some northern producers reliant on the live export trade reported losses into the $300,000 area.
“It is only anecdotal but I suspect there would be some producers who would be out of business if a longer term total export ban was in put place.”
Professor Derek Baker, from the University of New England at Armidale, said the Australian cattle industry was not alone in its fight to keep open live trade doors.
“In New Zealand, there have been many false starts on live trade, particularly in sheep,” he said.
“Underlying that has been concern it will take away processing jobs.
“And there is a long history of this in Europe, where the transportation of calves for fattening has been banned on the basis of animal welfare but of course, that has roots in protecting jobs.”
