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Market Report : Indonesia : Second Edition : January 2014.
General Comments.
Live cattle and box beef.
Despite dire predictions from some, the price of slaughter cattle dispatched from
Indonesian feedlots remains high and is in fact steadily increasing. Some abattoirs
in East Java must pay Rp40,000 for fat cattle delivered to their facility. This is
reflected in the high prices in the table below.
This appears to be due to the fact that the majority of the large numbers of both
feeder cattle and “slaughter” cattle imported from late October to late December
are still not finished and ready for sale. There are now large numbers of cattle
approaching sale weights so it is expected that towards the end of February a flood
of finished cattle will pour from many Java and Sumatera feedlots resulting in a
easing of the price. The rate at which the lot feeders sell this spike of cattle will
determine how far the price will be forced down.
The market has also been expecting that the sales of box beef imports would be
putting downward pressure on prices but this is definitely not happening. While
there is very limited information regarding import volumes, the general consensus
is that this product has been held up at Indonesian ports due to the long winded
nature of the Indonesian Customs clearance process. It is possible that this flood of
frozen beef may also hit the market at about the same time as the live cattle rush.
Breeding cattle.
The Indonesian government continues to excel at shocking the market with the
Minister of Trade making statements to the effect that Indonesia would import 2
million head of breeders this year with the feedlotters leading the process with
185,000 head or 25% of feeder import numbers. This “political” statement has
thrown even the departments of Trade and Agriculture into a spin as they consider
how clarifiy these silly statements. So far they have decided to play it safe and say
nothing. While feedlot companies are holding their breath, waiting for the
department of Agriculture to explain how many breeders they are expected to
import, they also know that these breeders cannot be imported without an agreed
health protocol in place. The finalisation of the stalled breeder protocol
negotiations may be the only benefit that comes from such politicial
grandstanding.
Market Price Chart.
Live cattle prices continue to rise steadily although meat price rises tend to lag a
little behind the pace of the live animals as butchers take more time to pass the
price rises on to their wholesale and retail customers. With chicken price wars still
in play in Medan and Jakarta it must be a very difficult sell for beef butchers to
convince their customers to pay the additional margins to cover their cost
increases.
Location
Date
Jakarta
Nov 13
Dec 13
Jan 14
Lampung Oct 13
Nov 13
Dec 13
Jan 14
Medan
Nov 13
Dec 13
Jan 14
Wet
Market
95,000
100,000
104,000
120,000
120,000
120,000
120,000
90,000
90,000
95,000
Super market
112,950
98,900
105,300
125,000
110,000
127,750
126,500
89,000
93,000
90,000
Broiler
chicken
35,000
20,000
22,000
35,000
35,000
35,000
35,000
37,000
20,000
24,000
Live cattle
31,500
34-37,000
38,000
34,500
33,000
34,000
36,000
34,000
33,200
39,500
Other Markets.
Thailand : January 2014
Major Thai feedlots are selling locally bred live slaughter cattle to Chinese buyers
for illegal live shipments by barge upstream on the Mekong river to Yunnan
province in S.W. China. Barges are loaded with about 100 head per shipment and are
being dispatched from a number of river ports between Udon Thani and Chiang Rai.
See the map below. Current estimates are that this trade represents in the order of
10,000 head per month.
Fat cattle are selling to this export trade for 105 Baht per kg live weight (farm gate)
which is roughly equivalent to AUD$3.80. This is significantly higher than prices
available for the domestic market which are about 20cents per kg or more below the
price offered by the Chinese buyers.
Once road freight to the port, river freight, smuggling facilitation fees and weight
losses are taken into consideration, the live weight price of these cattle delivered to
SW China are likely to be in the order of $4.50 per kg.
The Australian government’s change in policy regarding the live cattle export/import
MOUs is a major step forward towards the first live cattle imports from Australia to
Thailand. Sources close to the leading Thai feedlotters who will drive this import
push expect that the first imports of feeder/slaughter cattle from Australia are likely
to commence before the end of 2014.
Thai sources also advise that Australian breeding cattle imports may be on the
shopping list due to some major changes occurring in the Thai agriculture.
Government policies to subsidise rice growing are running into significant problems
as farmers who participated in this increased rice production are now having
difficulty getting their subsidy payments from the government. The result is a search
for alternative enterprises. With the rapid rise in the price of beef and live cattle, the
economics of importing breeding cattle is beginning to appear profitable.
If both Indonesia and Thailand start buying significant numbers of breeders at the
same time this new demand could be greater than supply.
Myanmar : January 2014
Chinese buyers are based permanently in Myanmar, buying live cattle and sending
them overland across the northern Mekong river border directly into SW China.
Given the lower prices of cattle in Myanmar and the reduced distance to move them
into SW China, the margins for this trade must be very attractive hence the reduced
flow in the traditional easterly direction into Thailand.
The border between Myanmar - China and Thailand - Laos is mostly marked by the
path of the Mekong River as it flows from the mountains of SW China towards the
south east where it finally flows into the sea at through the Mekong delta near Ho
Chi Minh city in southern Vietnam.
Chiang Rai is to the north of Chiang Mai. Udon Thani is the city to the south of
Vientiane.