Australia no longer head of the class as live export industry endures tough conditions

Australia is no longer the king of live cattle exports, slipping to second on the list of the world’s biggest exporters — behind Mexico — as the industry endures its “toughest trading conditions in history”. The stark declaration was contained in Meat and Livestock Australia’s November projections, which forecast more than 700,000 head of Australian cattle will be exported in 2021 — 30 per cent less than last year and half the all-time record. Australia’s dominance of the live cattle trade peaked at nearly 1.4 million head in 2015, but the trade has softened as the industry struggles with a “range of issues”. MLA’s quarterly report said the live cattle export industry was enduring its toughest trading conditions in history despite farmers enjoying record prices. “The cost of Australian cattle for overseas importers has resulted in negative returns as they struggle to offset increased costs throughout the supply chain,” the report said. “Some overseas operators have withdrawn from the market until trading conditions improve.” Mexico exported more than 1.1m head in 2020 — most of which were walked across the border to the US — while Australia shipped 1.05m head, about 80 per cent of which were bound for Indonesia and Vietnam. Australia has exported about 676,000 cattle this year, placing 2021 volumes on track to be the lowest since 2012, when the trade was still reeling after the 2011 export ban. Both the Western Young Cattle Indicator and Eastern Young Cattle Indicator have smashed their own records numerous times this year, with the latter breaking the 1100¢/kg mark last week. Surging prices have led to key markets such as Vietnam — the second-largest importer of Australian cattle — increasingly looking to alternative sources such as Brazil for affordable supply. Thomas Elder Markets analyst Matt Dalgleish said Australian cattle exports to Vietnam fell 66 per cent in October, with flows sitting nearly 88 per cent below what would be considered normal according to the five-year average. Exports into Indonesia fell 24 per cent in October to sit 58 per cent below the 50,000-plus head normally shipped from Australia to Indonesia this time each year. “Indonesia and Vietnam account for nearly 75 per cent of Australian live cattle exports in 2021, so with both destinations experiencing a decline in October, it is not surprising to see cattle export volumes eased a further 12 per cent over the month,” Mr Dalgleish said. “Australia had been the primary supplier of live cattle into Vietnam, so it will be interesting to observe how the increased competition will evolve next year and how much market share the Brazilian exporters will be able to capture.” Kimberley Pilbara Cattlemen’s Association chair David Stoate said it was business as usual for pastoralists, who were “exporting plenty” and benefiting from the high price of cattle. “It’s business as usual and it will be again next year so as long as we get a decent wet season,” he said. The Victorian town of Portland was next (11,005), followed by Darwin (7696), Wyndham (3940) and Fremantle (3904). Of the nearly 22,000 Australian cattle shipped to Indonesia in October, about 75 per cent were exported from Broome and Wyndham. The remainder were shipped from Darwin. Indonesian feedlots are reporting losses of about 57¢/kg on imported animals — about $200 per feeder steer and $280 for heavier cattle — according to Beef Central. Australian live cattle exports are predicted to build from the second half of next year, reaching 750,000 head by the end of 2022 and 830,000 head in 2023. Growth will be driven by supply, price, COVID-19 recovery, and increased competition in the market. “As Australia’s cattle population and live export supply return to pre-COVID levels during the next two years, prices are expected to gradually ease, which will be welcome news for Australia’s livestock exporters and their overseas customers,” the MLA report said. The drop in live exports has also been linked to Australia’s cattle herd having entered a rebuild phase.