January 17, 2014

Australia's cattle export prices up during the start of 2014

This week, feeder steers heading out of Darwin to Indonesia have been fetching up to AUD2.30 (US$2.03) a kilogramme, which is well up on prices of around AUD1.50 (US$1.32) a kilogramme in the middle of last year.

It's a very profitable start to 2014 for Top End cattle producers, who are also enjoying plenty of rain this week care of a tropical low. Indonesia is expected to import around 700,000 head of cattle this year, up from 395,000 imported in 2013.

Luke Bowen from the Northern Territory (NT) Cattlemen's Association says it's all shaping up well for those in the live export zone.

Bowen says the industry was still getting its head around Indonesia's new price-based system, which will ultimately dictate how many cattle are exported there this year.

"The Indonesian Government is trying to get the price of beef down to around IDR75,000 (US$6.20), but the mechanism for doing that is not particularly well defined, it's retrospective," he said.

He added that there'll be studies done on prices in various parts of the market and then retrospectively they'll keep the permits running at the same rate or reduce or increase the permits in the following quarter depending on what's happening.

According to reports, the Indonesian Government is already considering raising the 'reference price' of beef from IDR76,000 (US$6.32) to around IDR90,000 (US$7.50), because of the depreciating Indonesian currency against the US dollar.

Trade Minister Gita Wirjawan said that the reference price is already unreasonable because it was based on the rate of IDR10,000 per dollar, while presently the exchange rate is more than IDR12,000, up 20%. There needs to be a revision.