KEY POINTS

• World food prices, including beef, are rising fast with no end in sight.

• Australian cattle prices continue to climb but retail prices remain steady. Something has to break.

• If lumpy skin disease reaches Australia the result will be catastrophic.

INDONESIA
SLAUGHTER STEERS $5.05KG LIVE WEIGHT (RP10,400 = $1AUD)    

Lumpy skin disease has been confirmed in cattle in the Riau region of Sumatra. Given that this disease is transmitted by biting insects, the virus is likely to spread throughout the Indonesian island chain despite the best efforts of the government to control the spread using vaccination and biosecurity measures. Once the virus reaches Timor it is only about 800 kilometres from the north of Australia and its large cattle and buffalo herds. If the virus is transmitted by insects then movement is likely to occur during the northeast monsoon season when prevailing winds are blowing from Timor towards Northern Australia.

In Asia and most other parts of the world, cattle are under close daily care by their owners. This means that a largely non-lethal disease such as LSD can be managed with prompt attention using topical treatments, shelter from harsh weather, general care and, if necessary, antibiotics to treat any secondary infections. But the situation is far more serious in the case of pastoral cattle and wild buffalo herds in the north of Australia. In Indonesia and most other parts of the world achieving a 100 percent vaccination coverage is not a difficult task. Normal musters in the north of Australia are usually well below 100 percent so vaccination coverage will be incomplete leaving a susceptible nucleus of animals for the virus to survive and continue transmission. This is the reason I have made the statement that I believe that this is the most serious threat to the Australian cattle herd since I graduated in 1975.

Clinical signs of the disease from the Merck veterinary manual suggest that about 50 percent of animals will develop symptoms, although mortalities are quite low. But this refers to cattle that are intensively managed and provided with timely and appropriate treatment. It does not include abortions and a significant reduction in fertility which can also be expected. Having lived in the Top End of Australia for more than 40 years, I believe that the outcome of the introduction of this viral infection to northern pastoral herds will be catastrophic. Vaccines are available but are in my view far from perfect. We need an urgent effort to develop new vaccines that can provide better protection for this incredibly valuable resource. Since I arrived in the Northern Territory in 1979 the prices received by our producers have been appalling until the past few years. After waiting all this time for a reasonable return for their hard work and investment, northern producers are now staring down the barrel of a loaded gun that has 
the potential to devastate their productive capacity and incomes, not to mention the horrendous 
animal welfare implications.

Darwin feeder steer prices just keep climbing with the price increasing slightly to $5.45 up from $5.35 in January. World demand and supply don’t appear to have been affected by the Ukraine war at the moment, so it seems likely that these prices are sustainable for the short term at least.

Five vessels exported live cattle from Darwin Port to Indonesia during February with a total shipped of about 17,800 head of which roughly 800 
were buffalo.

There was only a slight rise in prices with the indicator rate lifting from Rp52,000 to Rp52,500 per kilogram live weight for slaughter steers. My advice is that this small increase in price is a reflection that April is Ramadan so there is logic in resisting selling at a discount as lot feeders know that demand will be at its peak soon and the following week of Lebaran celebrations. Prices ranged from the high Rp49’s in Lampung to Rp55,000 per kg for the best yielding animals in West Java.

Slaughterhouses and meat traders in Greater Jakarta went on strike during February in protest against high cattle and beef prices in the expectation that the government would be able to reduce prices and increase supply. Unfortunately, the high prices for live cattle and beef are a symptom of global food inflation and not a simple supply chain hiccup that governments can rectify. The whole world was already facing rapidly rising inflation well before Russia invaded Ukraine. 
A secondary effect of the war will now be higher world energy, fertiliser, and wheat prices. This will push the food inflation even higher with no country immune to the impact, especially those that rely on significant levels of imports. Costs of beef production, processing and freight will keep rising as fuel prices go through the roof so there appears to be little hope that any measures by government or industry will have sustained downward pressure on the retail price of beef.   

The Indonesian government has made policy changes to try to reduce the impact of rising prices, including encouraging importers to try to source beef from markets other than Australia, including Brazil and Mexico

One of the suggestions to reduce the cost of livestock feed in Indonesia was to switch from local agricultural waste products to imported Australian wheat. Given the likely impact of the war on global wheat (and other grain) prices, this option is probably no longer 
under consideration.

VIETNAM
SLAUGHTER STEERS $5.09KG (VND16,500 TO $1AUD)  

Once again slaughter cattle prices have edged up by an average of dong 1000 to dong 84,000kg live weight, although this will provide importers with no joy as their selling prices are still well below buy-in rates. Importing low fat, high yield bulls and cheaper buffalo is a good strategy but not nearly good enough to have any hope of breaking even. No cattle were exported from Townsville or Darwin to Vietnam 
in February.

Vietnamese farmers are having no luck with African swine fever and lumpy skin disease, causing huge losses to their pig and cattle populations. Extremely cold weather has resulted in large numbers (1000+) of deaths in cattle and buffalo 
in some northern provinces. Farmers are making campfires to keep their cattle warm.

Vietnam has had a good relationship with Russia, which was their most loyal supporter during the Vietnam-American war. During the first half of 2021, Russia became the largest meat exporter to Vietnam, exporting 55,000 tons of pork, 6100 tons of chicken and 990 tons of beef with a total value of USD$121 million from January to June. This trade is now likely to be interrupted as even commercial shipments of products to and from Russia are being restricted due to a combination of financial sanctions and the inability of traders to obtain insurance for commercial cargoes entering or leaving Russian ports.

CHINA
SLAUGHTER CATTLE $7.70KG LIVE WEIGHT (RMB 4.60 = 1AUD$)

Slaughter cattle prices did not change with the indicator rate holding at yuan 35.4kg live weight, which converts to a slightly lower AUD rate than January due to currency movements. Beef prices in the wet and supermarkets were also unchanged while pork prices eased substantially in Beijing and Shanghai.

China is a large importer of wheat and the world’s largest consumer of petroleum products, so it will be watching the Russia-Ukraine war with great concern as it appears certain that energy prices will spike around the globe and food inflation is just getting started. Both of these factors will have serious implications for the Chinese economy and the daily lives of consumers. The National Bureau of Statistics reported that the prices for fresh vegetables in China surged by 30.6 percent last November compared with a year ago. This followed a year-on-year rise of 15.9 percent in October with these rises attributed to the severe floods and other extreme weather events. Rising global grain prices will be a huge blow for the chicken and pork industries, which rely heavily on imported grains, primarily soybeans from north and south America. While wheat is the first to be affected by the war, this will cascade to all other grains as the world markets adjust to the Russian and Ukraine deficits.

PHILIPPINES
SLAUGHTER CATTLE $3.40KG (PESO 37.6 TO AUD$1)

No change in the domestic slaughter cattle price with similar stability in the price of beef in the wet and supermarkets. Given the Philippines high sensitivity to energy prices, this stability seems likely to come to an end quite soon. Sharply higher fuel prices will slam the entire Filipino economy, which relies so heavily on transport logistics across its far-flung archipelago.

THAILAND
SLAUGHTER STEERS $4.64KG (BAHT 23.7 TO $1AUD)

Slaughter cattle and wet market beef prices have remained steady. My agent reports that official Thai inflation figures rose by 5.3 percent during February so it is likely that beef prices will soon be on the rise. The large number of swine flu outbreaks would suggest that their pork industry will be under severe stress trying to control the disease, so there will no doubt be flow-on effects to beef consumption trends. New covid 19 infection rates are also very high.