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Horns of a dilemma: Can record live cattle prices be sustained?

Five years ago, a northern cattle industry veteran made the bold prediction that live export prices would reach $4 per kilogram — and that he would “shout the bar” at the NT Cattlemen’s Conference if it didn’t happen.

Mar 18, 2020, updated Mar 18, 2020
Not even the COVID-19 pandemic is expected to stifle buyer confidence in a what experts are tipping will be a bull market for cattle sales in Queensland. (Photo: ABC)

Not even the COVID-19 pandemic is expected to stifle buyer confidence in a what experts are tipping will be a bull market for cattle sales in Queensland. (Photo: ABC)

Ross Ainsworth’s forecast came true this week when a line of feeder steers bound for Indonesia from Darwin sold for a record high of $4 per kilogram.

With the national cattle herd at its lowest point in more than 20 years because of the drought, supply across northern Australia is tight.

This reduced supply, coupled with access issues for many properties during the northern wet season, means exporters are having to fork out high prices to draw cattle on to the market.

While ABC Rural is aware of at least one exporter who has paid $4 per kilogram for feeder steers to top up a ship, official quotes are for $3.85 per kilogram.

Exporters are paying $3.50 per kilogram for feeder heifers to Indonesia ex-Darwin and for slaughter steers to Vietnam ex-Townsville.

Consolidated Pastoral Company, which runs one of the biggest cattle herds in Australia, mainly targeted at live export, is also a part-owner of two feedlots in Indonesia.

Chief executive Troy Setter said while the high live export price was great for cattle producers, it created tough conditions for South-East Asian importers.

“Some of the higher prices are causing some slowdown in volume to key markets such as Indonesia and Vietnam,” he said.

“We’re not sure yet how coronavirus will impact — if it does or if it doesn’t — on consumer demand in some of our destination countries.

“But there is certainly going to be a margin squeeze and some red numbers for the importers, but we are certainly seeing some good black numbers for cattle producers.” So, it is exciting times for cattle producers in northern Australia.”

NT Livestock Exporters Association CEO Will Evans said strong demand from South-East Asia over the past two years produced solid prices for cattle producers, but exporters had started to suffer.

“With the summer rains this year across the north and east coast, we’ve seen market conditions shift heavily in favour of producers,” Evans said.

“How sustainable this is in the current environment, with the challenges we have coming down the pipeline, remains to be seen.

“We’re rapidly approaching a point where a price correction is going to become necessary, as current levels mean we’re not competitive in our export markets.”

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‘We don’t think we can keep this going’

Paulus Hadi Subroto, who manages a feedlot in North Sumatra that imports and fattens Australian cattle, said the skyrocketing price was hurting his business.

He said his feedlot was only half full, and that once those cattle were sold to the meatworks, he was not sure whether he could afford more.

“We’re afraid that if we continue buying cattle from Australia, then nobody will buy [the beef] in Indonesia because the price is too high.

“The price [we are paying] for cattle from Australia is about $US3.60 a kilogram ($5.83), so we will have to think twice about buying cattle from Australia, because we don’t think we can keep this situation going.

“By my calculations, I’ve got two months before I sell these cattle, but after that I don’t know — I don’t have any plans to buy [more] cattle.”

Subroto said his business normally employed about 100 people but that he had laid off nearly half of his workforce.

He said cattle importers in Indonesia were facing pressure, not just from high Australian prices, but also from the increasing amount of cheaper imports of frozen Indian buffalo meat and frozen Brazilian beef.

– ABC / Daniel Fitzgerald

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