November Market Report : S.E. Asian Beef Industry

84th Edition : November 2020.

Key Points

  • Indonesian slaughter prices up again but retail fresh beef prices are unchanged.
  • Filipino slaughter prices fly even higher.
  • Indonesian & Vietnamese demand for live imports remains strong despite rising Aussie cattle prices.

Indonesia : Slaughter Steers AUD $4.17/kg live weight (Rp10,350 = $1AUD)

Slaughter cattle prices have continued to rise with the new indicator rate this month at Rp43,000 per kg live weight for slaughter steers. There is still a wide spread of prices from Rp41k in Lampung up to 45k in Java while prices in Aceh have been as high as Rp46,700. While these rising prices are no real surprise given the much higher purchase price for feeder cattle from Australia the remarkable market feature this month is that retail fresh meat prices have not changed. This situation has been seen before but not for a very long time. When butchers are unable to pay the additional price, one of the strategies used in the past has been to offer them credit as a means of reducing the pain of lower margins. This is always effective in the beginning as butchers around the world like nothing more than credit but the outcome in the past has usually been a high level of defaults when the payment is finally due. Wet market butchers frequently have no assets to offer as security so loans are often made on the basis of a mixture of dire need, good will and crossed fingers.

Exporters report that despite the record Australian FOB feeder prices of AUD$4 per kg live weight, the demand for future imports is strong. October imports were 36,000 in line with the regular monthly average with a calendar year number to the end of October at 520,000 or a 12 month average of 43.3k. The current high demand suggests that this level of imports may not be sufficient to keep a lid on domestic fresh beef prices.

Frozen Indian buffalo (IBM) appears to be widely available but despite the strong demand for fresh beef, the retail prices for IBM continue to be discounted with rates as low as Rp70,000 (from a normal price of Rp80k). This seems to be further evidence that the frozen IBM and fresh beef have divided into two quite separate and relatively unrelated markets, a very good sign for the future of fresh beef.

Darwin feeder steer prices surged upwards again in November ending the month at the widely predicted $4 per kg live weight as supplies in the remaining stockpiles continue to run down. One-off rates of up to $4.10 were reported for special lines. The general consensus is that $4 per kg is here to stay until the new mustering season commences in April 2021. Townsville slaughter cattle rates continue to be strong at $3.80 per kg live.

Vietnam  :  Slaughter Steers AUD $4.50 / kg (VND16,900 to $1AUD)

Slaughter prices have jumped an average of Dong2,000 to D76,000 per kg during November in line with rising prices for slaughter and feeder cattle imported from northern Australia. Exporters report that demand for December shipments continues to be extremely strong despite rising prices and dwindling supplies. October import numbers were 26,000, well up from 18k in September.

It seems that the strong domestic economy, stock losses in the recent floods and the massive and ongoing decline in pork availability following the African Swine Fever (ASF) pandemic are the main drivers of this powerful demand. The OIE map below shows that Vietnam still has a relatively large number of ongoing outbreaks (1,475) across the country.

China :  Slaughter Cattle AUD $7.59 / kg live weight  (RMB 4.82 = AUD$)

Slaughter prices have eased this month, falling back from Y38 in October to Y36.6 per kg live weight in November. Despite this, retail prices in Beijing and Shanghai have remained steady and even increased in Beijing supermarkets. Pork prices have eased a little but are still very high by recent standards.

Philippines  :  Slaughter Cattle AUD $7.22 / kg (Peso 35.3 to AUD$1)

The live cattle slaughter price in Mindanao has risen from  225 last month to 255 Peso per kg live weight in November. Cattle prices continue to respond to the increased retail demand due to the easing of Covid19 restrictions especially in Mindanao where my reporter is based. In his words “Everything went up, everything is available and people have cash” and “consumers have broken loose”.

Thailand  :  Slaughter Steers AUD $4.75 / kg (Baht 22.1 to $1AUD)

No change in slaughter prices or wet market beef rates during November which is not surprising as the Thai economy has been heavily impacted by the pandemic.

Australia truly is a lucky country and I am very lucky to be back.

I continue to enjoy some of the bounty of the Australian food industry while visiting friends and family across different parts of the country. One of the restrictions when living in Asia (and sailing on cattle ships) is the marginal quality of beef and often a total lack of wine. Angus Adnam and Greg Pankhurst have been assisting me to catch up on these deficits with the best of beef, fish and wine to match. See samples of some magnificent pairs below. The fish is personally caught whiting from Morten Bay thanks to Harry Trelor.  I was also lucky enough to find some delicious Jersey Milk in Cobram, 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.

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