Tough times for live-ex show some signs of easing

Tough times for live-ex show some signs of easing


Commercial
Australian Livestock Exporters’ Council chief executive officer Simon Westaway.

Australian Livestock Exporters’ Council chief executive officer Simon Westaway.

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Vietnam volumes bounce back in July.

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HIGH livestock prices and in-market challenges continue to create very tight margins in the live cattle trade, not just for Australian exporters but for their overseas partners as well.

Feeder and slaughter cattle export volumes for the year-to-July are down 36 per cent on the same period last year at 385,000 head, dominated by big declines in business with Indonesia.

However, it appears the flow of cutbacks including vessel and business sales is easing and the rate of decline in numbers is slowing.

Markets like Vietnam are even showing a slight bounceback in response to the recent drop in Australian cattle prices.

Industry leaders are also expressing confidence in the the longer term outlook, particularly where China is concerned.

Australian Livestock Exporters’ Council chief executive officer Simon Westaway said individual exporters had ridden out what has possibly been the toughest trading conditions in close to two decades in different ways.

Along with sales, ships have been taken out of operation for maintenance, businesses have restructured and supply chains reviewed.

However, it was unlikely the adjustments, and the lack of supply from Australia, would damage relationships long term, he said.

“One of the nuances in the markets where we put livestock is that with emerging middle classes, slight changes in price can have a big impact in terms of demand,” he explained.

“Combined with the various protectionist policies in place, the short term impacts have been dramatic.”

As livestock prices continue to correct, volumes exported are expected to rise and in fact exporters who haven’t been in Vietnam for some time were already back again, he said.

The latest industry statistics compiled by Meat and Livestock Australia and LiveCorp show Vietnam exports totalled 14,300 head in July, a 10pc year-on-year lift, despite the overall figure to Vietnam for 2017 so far still be below last year’s.

Meanwhile, Indonesian Government policies including the five-to-one feeder to breeder ratio and the supply of Indian buffalo (IB), are having an impact.

Mr Westaway said the take-up of IB in wet markets is believed to be around 20pc, which is perhaps less than what was originally predicted.

“The reality is fresh beef from Australia, which supports the Indonesian feedlot industry, is a different product,” he said.

The optimism surrounding China, too, was strong.

High livestock prices, nutting out protocols and the need to get infrastructure on the ground in China was holding the trade back at the moment but “the long term opportunity is clear,” according to Mr Westaway.

“We are seeing new Chinese investment into Australian export businesses, which is a tell tale sign the trade will expand over time,” he said.

“Australian beef is underdone in China but the industry overall needs to take a long term view and all sectors should be able to participate.”

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