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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 / Wet Market / Super market / Broiler chicken / Live cattleJakarta / Nov 13 / 95,000 / 112,950 / 35,000 / 31,500
Dec 13 / 100,000 / 98,900 / 20,000 / 34-37,000
Jan 14 / 104,000 / 105,300 / 22,000 / 38,000
Lampung / Oct 13 / 120,000 / 125,000 / 35,000 / 34,500
Nov 13 / 120,000 / 110,000 / 35,000 / 33,000
Dec 13 / 120,000 / 127,750 / 35,000 / 34,000
Jan 14 / 120,000 / 126,500 / 35,000 / 36,000
Medan / Nov 13 / 90,000 / 89,000 / 37,000 / 34,000
Dec 13 / 90,000 / 93,000 / 20,000 / 33,200
Jan 14 / 95,000 / 90,000 / 24,000 / 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.