July 28, 2020
Overall gain in Australian live cattle exports hit by COVID-19
Cattle exports to Australia's key market, Indonesia, have taken a pandemic-related dip but demand from other customers made up the gap and overall volumes are back 1% on 2019 levels, Farm Weekly reported.
Industry figures show cattle exports in June totalled 124,000 head, which is the largest volume of cattle shipped since November last year.
Volumes to Indonesia were down 16% year-on-year until June, with Rabobank senior animal protein analyst Ben Santosoattributing this to several factors.
"Inventory of buffalo meat was still high at the beginning of the year, followed by drop in demand during large-scale social distancing measures in April – some festivities where beef is usually consumed were not allowed,"Santoso said.
"Slaughtering businesses were also left with accumulating by-products that had no takers –hide for the apparel industry and offal for the foodservice sector.
And the feedlotter margin was hit by a depreciating Rupiah and lower offtake due to a dropin demand," he added.
While Santoso said the situation in Indonesia had gradually improved since May, a return to pre-Covid demand this year was not expected.Rabobank is forecasting Indonesia's feeder cattle imports to fall by 15-20% year-on-year in 2020.
Meanwhile, Australian Department of Agriculture data shows Indonesian feeder exports were down 12% year-on-year, at 251,354 head, for the first half of 2020.
Santosoexplained that Indonesian feedlots took advantage of lower prices and the stronger Rupiah-versus-Australian dollar to restock in May and June, along with cheaper corn silage from the main harvest season. However they are not full and purchases may not continue as those drivers reverse, he said.
"Plus we have continuing imports of Indian carabeef, which for the moment remains slower than normal. A key gauge of demand will be for IdulAdha slaughtering (for local and some non-castrated Australian steers) on 31 July," he added.
Exports to Vietnam, however, are up 48% year-on-year for the first half of 2020. Analysts attributed this to a shift to beef consumption from pork as pork prices rise due to African swine fever.
Addtionally, Australian Live Exporters Council chief executive officer Mark Harvey-Sutton citied that Vietnam was a growing market for Australian live exports as their cattle yield well and provide good local employment.
Analysts from Meat & Livestock Australiasaid that demand fundamentals supporting beef consumption in Australia's cattle markets remain strong, but many markets across Southeast Asia remain price-sensitive, which will continue to challenge the trade in light of the current supply outlook and heigthen the threat of increased competition from low-cost competitors.