103rd Edition : June 2022.
· Foot & Mouth spreading rapidly throughout Indonesia.
· First FMD vaccinations commenced in Java on the 25th of June.
Indonesia : Slaughter Steers AUD $5.24/kg live weight (Rp10,300 = $1AUD)
Chaos continues with live cattle markets this month with even more volatility than last month. Live cattle price reports range from as low as Rp15,000 per kg for an emergency slaughter animal to Rp59,000 for top quality guaranteed disease-free fat ox. I have chosen to use Rp54,000 per kg live weight as the best “average’ figure for my indicator price for June. Retail prices are generally unchanged from last month. IBM remains at Rp129,000 per kg in Transmart.
Foot and Mouth Disease (FMD) continues to spread like wildfire throughout the Indonesian island chain with infection confirmed in most areas except the far eastern islands. Infection in Bali was officially notified on Saturday the 2nd of July which suggests that it has been present for at least 2 weeks before official notification.
FMD in Bali means that some tourists will inevitably be exposed to infected cattle which are excreting virus. Hindu Bali has large numbers of pigs which are the most potent spreaders of the FMD virus. Bali has an estimated 600,000 cattle and 700,000 pigs. Once vaccine is available, it will be a massive undertaking to get them protected. Full vaccine protection needs an initial 2 doses, 3 weeks apart then a booster in 6 months.
These cows are on a vacant block about 300 meters from my house in one of the main tourist suburbs of Seminyak. The buildings in the background are tourist villas. Tourists coming and going from these villas have ample opportunity to come in contact with infected saliva or other discharges. The cows are tethered but the calves can wander over onto the footpath beside the villa walls. The risk of transmission to Australia will remain very high until these animals and the rest of the Balinese herd of cattle and pigs are fully vaccinated.
Considering that the next 6-12 months will present a much higher risk of tourists coming in contact with infected cattle or discharges, I strongly recommend that Australia insist on the installation of disinfectant foot sponge mats in airports where travellers must walk through one onto the plane in Bali and off the flight in Australia. Australian Biosecurity does not seem to think this is necessary. Considering the cost and inconvenience will be minimal and the potential loss to Australia being up to 100 billion dollars if the virus reaches livestock in Australia, I would have thought this would be a pretty sensible insurance policy.
The only good news in the FMD situation is that the first imported vaccine for FMD was distributed by the government on the 23rd of June with the first vaccinations commencing on the 25th. This was 74 days after the formal announcement of infection in April. Unfortunately, only 800,000 doses have been distributed at the time of writing which is totally inadequate to deal with this raging epidemic. The government has announced a substantial budget allocation to fight the outbreak which is in the order of AUD$55 million. With additional support from other countries including Australia this should be a very good start.
These are the main themes that are emerging from my recent communications:-
· With little or no compensation, farmers are reluctant to notify authorities of infected animals preferring to sell them to salvage what value they can. This simply speeds up the transmission of the virus.
· Brahman (Bos indicus) breeds are more resistant to the disease than Bos taurus.
· Heavy cattle suffer much more than light cattle as their body weight appears to promote the separation of their claws which prevents them from standing. The critical cut-off weight is 400-450 kg. Any infected animals over this range will almost certainly require emergency slaughter
· The above factors mean that the dairy cattle have been hardest hit as they are Bos taurus and usually over 450 kg. National milk production is down about 30% and continuing to fall.
FMD in dairy cows. Note the 2 standing cows are salivating while the downers are almost certain to have severe foot lesions preventing them from standing without great discomfort. Their lactations have ended and they are about to suffer a massive weight loss making them an unviable dairy proposition. Emergency slaughter is the only commercial option.
The very important Muslim festival of Qurban couldn’t have happened at a worse time. During this festival of sacrifice, animals are purchased then slaughtered under religious supervision with the meat distributed to the poor. The people rich enough to donate expensive animals are mainly in the large cities which means that many animals are moved from the countryside to the city for the slaughter process. Given the huge number of animals moving for this purpose, an unintended outcome is an increase in the risk of transmitting the virus.
One of the key questions to be answered for this epidemic is how did the virus enter the country? With today’s virus identification and tracking technologies developed during Covid, it is a relatively simple and quick process to determine exactly where the virus infecting Indonesia came from. The puzzling thing is that nobody is saying anything, and I am sure it is not because they don’t know. The two popular theories are that it came in with frozen Indian Buffalo Meat (IBM) from recent imports or that it came across the Malacca straits with smuggled livestock. It is important to know the answer in order to plan protection strategies for the future.
Following this line of argument, there are animal production lobbyists in Jakarta suggesting to government that authorities should buy the meat from emergency slaughtered animals, especially the very large number of dairy cows being sacrificed and use this beef to supply the public instead of importing more IBM.
Lumpy Skin Disease (LSD).
This very important disease continues to have an extremely low profile with very little information available regarding its impact, spread and the progress, if any, of the vaccination program. The only information I have is that while it started in central Sumatra and quickly spread to the north and west, it does not appear to have been transmitted to Lampung at the southern end of the island where the largest numbers of imported Australian cattle are held in feedlots. I am also not aware of any confirmed cases in Java.
Darwin feeder steer prices remained at the $4.80 mark throughout May and June. Agents report that new orders for Indonesian feeders slowed right down at the end of June leaving the market extremely quiet for the beginning of July. The other major factor affecting prices is the recent unseasonal rainfall in northern Australia during June. In subtropical savannah country, winter rain is a disaster as is destroys much of the value left in the standing dry feed. As a result, producers will once again be planning to reduce their herds as much as possible to ensure that the balance of their cattle have enough feed to get them through to the end of the year. A combination of reduced Indonesian demand and sudden feed shortages are likely to put considerable downward pressure on prices of both feeders and heavier cattle across the north.
As usual, live export statistics are hard to come by with the best available data suggesting that about 17,000 head left Darwin and 11,500 left Broome during June.
We do know that not all were shipped to Indonesia with at least two shipments to Vietnam and other destinations. While this represents a reduction in the usual numbers at this time of year, I still find it amazing that an importer would bring feeders into Indonesia with an epidemic raging and no vaccine in the fridge waiting to protect them on arrival. July shipments are anyone’s guess as Indonesian supply and demand are totally unpredictable with so many emergency slaughter animals hitting the market. At the same time many consumers are hesitant to buy beef as they do not understand that FMD presents zero risk to human consumers. Considering the large numbers of heavy local cattle being emergency slaughtered I am more confident than before that demand for feeders will rise towards the end of the year as the production from the domestic herd crashes.
Vietnam : Slaughter Steers AUD $5.30 / kg (VND16,400 to $1AUD)
Quite a significant rise in slaughter cattle prices during June with the rate increasing by Dong 3,000 per kg or 3.6% from Dong 84k last month to Dong 87,000 in June. My reporter advised that this has been driven by the general rise in inflation throughout the Vietnamese economy. The annual inflation rate in Vietnam increased to a near 2-year high of 3.37% in June 2022 from 2.86% in May mainly due to increasing food and transport prices.
The unseasonal rain across northern Australia is likely to bring more heavy cattle onto the market than producers had originally planned. This may well reduce the price of suitable slaughter ox and bulls to a level that is once again attractive to Vietnamese importers.
China : Slaughter Cattle AUD $7.17 / kg live weight (RMB 4.70 = 1AUD$)
Slaughter cattle prices have slipped from Y34.8 in May to Y33.7 in June.
Wet and supermarket retail prices fell marginally during June while chicken and pork prices rose. This divergence in rates for different meats might be a reflection of the pressure on consumers wallets from a combination of the widespread Covid lockdowns combined with rising inflation albeit from low levels.
Philippines : Slaughter Cattle AUD $3.41 / kg (Peso 37.5 to AUD$1)
No change once again in slaughter rates for the 6th month in a row with the indicator rate remaining at Peso128 per kg live weight. Petrol prices however continue to rise with the June price up to Peso 90 per litre from Peso72 in May.
Official inflation for June was 6.1% but despite this my reporter advises that food prices have not made any significant rises yet although the prediction is that they will jump next month as the impact of the fuel increase filters throughout the supply chains.
Thailand : Slaughter Steers AUD $4.08 / kg (Baht 24.5 to $1AUD)
Cattle prices are diverging sharply depending on the destination. Slaughter cattle for the domestic market were selling during June for 94-98 Baht per kg while heavy cattle suitable for export to Vietnam were attracting 107-107 Baht per kg live weight. Feeders could only attract 100-102 Baht per kg live as demand from feedlots is drying up. If local feeder prices fall below 100Baht per kg, this will put an end to the import of feeders from Myanmar as the local cattle will be cheaper.
Generally, demand for cattle and beef in Thailand is weak with Vietnam helping to prop up rates for better animals. Thailand is suffering from rapidly rising inflation rates just like everyone else around the globe with an inflation rate of 7.66% for June 2022 which was the highest rate recorded in 14 years.
These figures are converted to AUD$ 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.