Live exports up, but how will Indonesian Q3 quota impact exports?

22 July 2015


Australia exported almost 148,000 head during May, taking the calendar year-to-date total to just over 583,000 head (Australian Bureau of Statistics), up 11% year-on-year.

Exports were assisted by high import quotas into Indonesia (100,000 head in Q1 and 250,000 head in Q2), in addition to continued demand from Vietnam.

However, how will the announcement of a 50,000 head third quarter quota into Indonesia affect exports?

Assuming the third quarter quota does not change and is completely utilised, this will leave about a 132,000 head shortfall on what was shipped to Indonesia in the first three quarters of 2014, as illustrated in Figure 1.

However, with shipments to Vietnam for the year-to-May period up 139% year-on-year (or an increase of just over 98,000 head) the impacts of reduced shipments to Indonesia may be mitigated. In fact, given Vietnam shipped almost 58,000 head during the third quarter in 2014 and shipments have only continued to grow since then, we may see Indonesia drop below the top market for Australian live cattle exports in the short term.

 

Live-ex-to-Indonesia.bmp

 

 However, the type of cattle going to Australia’s two largest live cattle markets should also be considered. Vietnam typically takes cattle at heavier weights (heavy bulls and steers for slaughter), while a relatively high proportion of cattle to Indonesia go onto feed (light weight steers and heifers).

In fact, as illustrated in Figure 2, cattle to Vietnam (includes all categories except breeder and dairy cattle) have averaged about $210/head FOB* dearer over the past two years, illustrating the value in the additional weight of the heavier types of cattle. Hence, looking at the next few months and beyond, we may see a relative increase in demand for cattle more suited to the Vietnamese market, as the third quarter import quota into Indonesia gets closer to being fully utilised. Feed conditions and producers’ ability to get cattle to heavier weights will also influence availability.

 

Live-ex-average-price.bmp

 

*this $/head FOB value is estimated by dividing the total value of feeder/slaughter live cattle exports by the total number of feeder/slaughter live cattle exports.

For the latest detailed live export figures, click here to access LiveLink.

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