9. Australian cattle industry projections - live cattle exports
After one of the most tumultuous years in the history of the Australian livestock export industry in 2011, the outlook for the live cattle trade heading into 2012 continues to be dominated by prospects to Indonesia. The Indonesian Government has declared that import permits for live cattle in 2012 will be capped at 283,000 head. The prospect for markets in the Middle East, South East Asia or Russia to absorb additionally cattle is expected to be limited.
With final December export figures (as collected by the ABS) not expected until early February, total live cattle exports for 2011 are estimated to come in at around 682,000 head – 22% below the previous year. Dominated by Indonesia, at an estimated 410,000 head for the past year (60% of the total), the next largest markets were Turkey (56,500 head), China (43,000 head), Israel (54,000 head) and Russia (30,500 head). The longer term traditional markets of Malaysia (12,700 head) and the Philippines (22,000 head) continued to diminish in volume, as the boxed trade from several suppliers holds sway in these markets.
Given the disruption to the trade, not just as a result of the ban, but the subsequent restriction to the approved supply chain, the 21% reduction in exports to Indonesia for the year could be seen as a better than expected outcome. At 410,000 head for the 2011 calendar year, exports to the market were the lowest since 2006, and some 360,000 head below the record shipments in 2009 (772,868 head).
However, one unexpected occurrence during the final four months of 2011 was the historically high cattle prices being offered across the north for cattle to Indonesia – prices reportedly peaked at 220¢/kg lwt, due to a shortage of suitable cattle for this market (below 350kg liveweight).
Contributing to the shortage of available cattle later in 2011 was the very favourable season across almost all of northern Australia, which has seen many young cattle much heavier than in the previous year. This pushed weights above the requirements for Indonesia, and given the seasonal conditions, had producers deciding to retain cattle or sending them east or south for further finishing.
As previously mentioned, the northern cattle that were either unable to be shipped to Indonesia during the second half of the year, or sold for eventual slaughter markets are anticipated to start to be processed by the second quarter of 2012. Given the seasonal conditions, they are expected to be in above average condition, with the overwhelming majority processed in Queensland plants, with the beef most likely exported.
With total exports for 2011 estimated to have fallen 22% year-on-year, there were markets other than Indonesia that contributed to the decline. In many instances, shipments to more price sensitive markets in South East Asia and the Middle East were constrained by the higher prices for Australian cattle, along with supply constraints.
In 2011, exports to the Middle East and Africa (including Turkey), came in below initial expectations, estimated at 134,000 head – some 40% below the previous year. Exports to most of the major markets in the region were somewhat volatile, with the political upheaval and higher Australian cattle prices impacting shipments to Egypt.
Exports to China at 43,000 head decreased 25% –predominately dairy cattle. Russia continued to be interested in Australian genetics and feeder cattle, primarily out of southern Australia, with exports for 2011 estimated to total 30,500 head, with one very large shipment in November of 14,208 head.
As previously mentioned, the prospect for Australia’s live cattle trade in 2012 is heavily hitched to the outlook for Indonesia. Despite pressures from an underlying growing shortage of beef (and rising beef prices), and a recently expanded feedlot industry (now grossly underutilised), the Indonesian Government has notified that import permits for live cattle will be limited to 283,000 head in 2012 – to promote beef self-sufficiency targets. This is the forecast export total to Indonesia for the year – a 31% fall in total exports to Indonesia in 2012, and almost 500,000 head less than the record year in 2009.
The projected 31% decline to Indonesia essentially explains the forecast 16% fall in total live cattle exports, with some improvement in exports to the Middle East and Africa (155,000 head), along with a small lift to Japan (15,000 head). China is forecast to take 45,000 head for the year – but again, the majority of this will be dairy cattle.
Provided the season across northern Australia (and especially western Queensland) stays favourable, the additional cattle for 2012 that would have possibly gone into live export markets should again be accommodated for further finishing. However, this will be dependent upon the finish to the 2011-12 wet season.
For cattle across northern WA and through the vast expanses of the Pilbara and Gascoyne regions of WA, the season will be crucial to determining both the turnoff of cattle and financial returns. While the break in the drought in southern WA will help to keep southern turnoff tight in 2012, increasing the demand for northern cattle, the cost of transporting cattle south may again erode any possible improvement in market prices.
Beyond 2012, Australia’s live cattle trade will be framed by the access to import permits to Indonesia, season conditions, the feasibility of exports to price sensitive markets and competition from slaughter markets for suitable young cattle.
Given the clouded outlook ahead, to forecast volumes to selected markets beyond 2012 is not possible. Total exports are expected to increase significantly, rising from 570,000 head in 2012, to 800,000 by 2016 – assisted by expanding cattle supplies through northern Australia and underlying strong demand and prices through South East Asia and the Middle East/Africa.
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