Collapse in cattle exports, high fuel costs savage Wellard

A collapse in Australian cattle exports and high fuel prices have plunged Wellard into the red. The live exporter crashed to a $US5 million loss in the December half year, with chief executive John Klepec calling out high beef prices and outbreaks of diseases including foot and mouth in Indonesia that sent exports to their lowest levels in 10 years. While revenue was only 2 per cent lower at $US22.8m, the market deterioration was exacerbated by a 55 per cent, or $US4 million, jump in Wellard’s fuel costs that easily extinguished profitable trading. Two of Wellard’s three export carriers are idle and not expected to resume work until as late as the June quarter when exports usually increase after the end of the northern Australia wet season. “LSD (lumpy skin disease) and FMD infections in Indonesia, combined with high Australian cattle prices and a backlog of cattle and beef, continue to hamper cattle exports to Australia’s traditional main market for live cattle exports,” the company said. “Other than producers, many participants in this market have either ceased operating or sustained significant financial losses in the past year.” The recovery of the Indonesian and Vietnamese markets is crucial to the Australian export trade. Given the outbreaks in Indonesia, importers have closed feedlots in the country set up to fatten Australian cattle for fear the herds may become infected. In Vietnam, imports have slumped because the high prices being paid in Australia for slaughtered have rendered exports to the country uneconomic. According to data from Meat & Livestock Australia, the Australian cattle herd is at its biggest since 2014, with live exports tipped to grow just 3 per cent to 619,000 head in 2023. It sees cattle slaughter in Australia increasing 8 per cent this year, but only if abattoirs can source enough labour. Shares in Wellard closed at 7.4¢, valuing the group at $39m.