Some of the first cattle to be unloaded at the reopened Batchelor Meatworks
Newspaper / Video
Sorry Steak Lovers, Australia’s Running Out of Cows
Nation’s beef producers could lose No. 2 exporter position
Rebuilding must happen now when there’s abundance of pasture
Australian Beef Steaks May Vanish From World Menu
Watch: Australian beef may slip off global menus if cattle producers can’t hasten the pace of a nationwide herd rebuild. Sybilla Gross reports.
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In what would be a blow to steak lovers the world over, Australian beef may slip off global menus if cattle producers Down Under can’t hasten the pace of a nationwide herd rebuild.
With herd sizes near the lowest since the early 1990s, the nation’s beef producers face the possibility of losing their No. 2 exporter position behind Brazil simply because they don’t have the stock available to service a global market as demand picks up steam up post-Covid-19.
The risks of that are growing as some farmers continue to send female cattle to the slaughterhouse instead of keeping them to expand herds. The latest official data show the ratio of female cattle processed as a proportion of total slaughter — an indicator for whether a herd is in restocking phase — at 48.2%, not enough to qualify for a technical rebuild, classified at 47% and under.
While there’s still time to get that ratio down, it needs to happen now as restocking is a years-long process from calf to slaughter and the industry faces a range of headwinds, said Matt Dalgleish, manager of commodity market insights at Thomas Elder Markets. “We’ve got to get those numbers back up so that we don’t lose market share into the export markets,” he added.
Australia’s beef industry has seen some turbulent times after years of drought forced farmers, who were unable to support herds on parched pastures, to cull hoards of cattle. The resultant oversupply on the market caused Australian cattle prices to plummet in 2019 to half the levels seen today.
Ranchers are also facing a less certain future with the rise of alternative-proteindemand as environmental and health concerns drive consumers to products like faux meat burgers or nuggets.
After rains replenished pastures last year and with the herd rebuild season underway, farmers held onto livestock, squeezing supplies and sending prices soaring to records. Those prices will probably remain at “exceptionally high levels” according to Rural Bank’s 2021 outlook.
Farmers have to contend between keeping their cattle for the rebuild, or sending them for slaughter to “cash in” now — a tempting offer for some looking to pay off large debts incurred during drought years for outsized feed grain purchases to keep the animals alive, Dalgleish said.
Prices for Australian cattle used to track South American countries, but drought conditions during 2014–15 tightened supply Down Under, which saw prices spike and never properly recover. Weaker Brazilian real and Argentine peso in recent years also gave those producers extra leverage.
With the Australian dollar gaining to almost 80 U.S. cents, the Aussie product is becoming out of reach for many importers. Prices have even overtaken the U.S., which traditionally holds the title for the world’s most expensive beef. The government forecaster Abares sees U.S. and Brazil expanding shipments through 2022-23 to high-value markets, notably China.
The high prices have also elicited a response from Indonesia, where strikes by local meat sellers over Australian beef costs prompted the government to warn that it will look to other suppliers, according to Australian media reports. Indonesia is Australia’s largest export market for cattle and beef offal.
Though Australia accounts for only 4% of global beef production, the country is one of the world’s largest shippers, with major markets in China, Japan and South Korea. Export volumes fell 15% last year as record prices hurt demand.
Australia’s position in those markets is increasingly at risk, compounded by free trade agreements that see higher tariffs on the nation’s shipments versus American beef, according to Dalgleish. “The trade situation is such that the U.S. product is being more favored,” he said.
For Australia’s cows that, unlike cattle in the U.S., mainly feed on grass instead of grains, climate change could add pressure to rebuild stock fast. With drought never far around the corner, coupled with higher frequency of extreme weather events, it’s crucial to bulk up herd sizes while pastures are green.
“Australia’s likely to be back in drought in a couple of years,” Dalgleish said. “It kind of doesn’t leave us a great deal of time to build up to those high twenties in millions of head numbers — 28, 29 million head. And then you’re kind of stuck again, depending on how prolonged the drought scenarios are looking. We could be back down at record herd levels, and low supply again.”
— With assistance by Sanjit Das
JBS to close Brooklyn and Dinmore processing plants
IN a sharp reminder of how tough the Australian red meat processing environment is at present, JBS Australia has confirmed it will close two of its flagship Australian red meat processing facilities, for different reasons.
The company’s Dinmore plant west of Brisbane – easily the largest beef processing facility in Australia, with normal daily operating capacity of 3400 head – will shut for at least a fortnight from Monday 24 August, as the processing industry continues to struggle to raise viable kills in the face of a drought-impacted livestock supply.
Further south, JBS will close its Brooklyn beef and sheep plant indefinitely.
Beef Central understands that Dinmore plant will operate for just two days next week – Tuesday and Friday being the last boning shifts – before the closure is enacted. The company has provided no assurances that it will re-open Dinmore after the scheduled fortnight closure, however.
While the plant had a week-long maintenance shutdown in June due to the growing cattle supply crisis, the upcoming closure is the first extended mid-year closure at the site since 2014, when herd rebuilding was in full-flight and cattle became extremely scarce.
In a clear sign of the industry-wide struggle to secure slaughter cattle supply this year, Dinmore has been operating mostly under three-day weeks since May, delivering throughput at around 50pc of plant capacity. As a high-throughput, low-margin business, it is well known that red meat processing becomes increasingly unprofitable, as throughput levels decline.
The company told Beef Central that it had been losing money at Dinmore ‘for a long time’ this year. The closure would have a big impact on customers, it said, with some consignments inevitably delayed by the decision.
Rates of slaughter across eastern Australia have gradually deteriorated during 2020 since the March rain event, as supply has dried up after two years of drought, pushing stock prices sharply higher. At the same time, cattle prices overseas have declined. In this recent article, Beef Central pointed out that Australian slaughter cattle are now the most expensive in the world.
Australian processing is trapped in a vicious cycle at present, with near-record high cattle prices colliding with listless global beef demand, due to increasing COVID uncertainty. High rates of production out of the US and South America, combined with a sharply appreciating Australian dollar have not helped the equation.
On the revenue side, JBS, like all Australian export processors, is facing challenging trading conditions in world markets, with abundant and relatively cheap US and South American beef eroding our competitiveness.
In confirming Dinmore’s closure to Beef Central this afternoon, JBS clearly laid some of the blame for the development at the feet of the Federal Government’s COVID JobKeeper program.
Neither JBS itself, nor its staff, receive any Jobkeeper financial support, but it is well known that other meat processors and pastoral companies are operating under the Jobkeeper financial umbrella.
As Beef Central pointed out in this earlier article, with labour representing about 70pc of the $300 cost to process a typical 300kg beast, Jobkeeper has in fact created a significant imbalance in the competitive marketplace for Australian slaughter cattle, effectively subsidising some competitors when buying next week’s kill.
Indefinite closure at Brooklyn, VIC plant
In a second major development in the company’s southern Australian operations, JBS has confirmed to Beef and Sheep Central the indefinite closure of its large Brooklyn beef and lamb processing facility near Melbourne.
Brooklyn has been caught up in Victoria’s COVID epidemic that has swept through a number of the state’s processing plant, boning rooms and distribution centres over the past two months, with the list of infected staff at Brooklyn now at more than 100.
Since last Saturday, Brooklyn was bound to operate under the Victorian Government’s new 66 percent manning level formula which applies to processing businesses as the state tries to rein- in its COVID epidemic.
“The persistence of community transmission of COVID-19 in Victoria and the directives from DHHS have meant it is impossible to operate JBS Brooklyn in the current COVID environment,” JBS Southern chief operating officer Sam McConnell said.
JBS Brooklyn’s beef and lamb processing workforce would be stood down for the period of time it takes for the Victorian Government and the Department of Health and Human Services to contain the community outbreak of coronavirus, the company said.
Employees of the company’s Brooklyn Beef and Lamb workforce who were eligible, would be entitled to the state government’s Pandemic Leave Disaster Payment following the DHHS determination for beef and lamb team members to quarantine for 14 days from their last shift.
Mr McConnell said JBS had worked tirelessly with the Australian Meat Industry Employees Union and the Victorian Department for Jobs, Precincts and Regions to ensure that the workforce would be able to access the entitlement.
“I would like to thank those partners for the collaborative nature in which these discussions were held to ensure that we arrived at the right outcome,” he said.
“The health and well-being of our employees, and the wider community in which we operate, is of paramount importance to JBS Australia. As a company, we recognise that our workforce is our greatest asset and we hope that access to this payment goes some way in addressing any concerns around job security and pay during Brooklyn’s closure.”
Paul Conway, Victorian State Secretary of the Victorian AMIEU, said that securing the pandemic payment was an important win for his members who had been working hard to support Victoria’s meat supply during COVID.
“JBS has been in constant communication and consultation with the AMIEU and the DJPR to ensure that workers at the Brooklyn’s facility will be entitled to the Pandemic Leave Disaster Payment. Their engagement with all stakeholders through this process and the measures they have introduced at the facility to protect their workers has been of the highest industry standard,” Mr Conway said.
JBS said it looked forward to continuing to work with the AMIEU, Victoria Health and DHHS to ensure JBS Brooklyn Beef and Lamb processing operations can resume as soon as possible.
Weekly kill: Further softening in grids as processor losses fall to record levels
DIRECT consignment slaughter cattle prices have continued to deteriorate this week, as beef processors rack-up record losses in the face of listless international beef markets.
Some Queensland grids have slipped another 5-10c/kg since last Tuesday, cementing a clear downwards trend over the past month.
Best offers seen from competitive processors in Southern and Central Queensland this week were 610-620c on four tooth grassfed heavy steer (some higher quotes HGP-free) and 540-555c/kg on the best heavy cows.
Grainfed offers from some processors were back 10c this week, to 620c/kg for milk and two-tooth 100-day heavy steers (implanted) and 630c on HGP-free this week.
In sites further south, Wagga (NSW) and Naracoorte (SA) were this week offering 605c on four tooth steer and 550c/kg on heavy cows.
Margins hit record low
With the dearest cattle in the world, Australian beef processors are struggling to remain competitive in international markets currently, with Japan, Korea, the US and China all very subdued, and being serviced by cheaper product from alternative suppliers.
The impact was clearly seen in theoretical processor margins produced last week by analysts Thomas Elder Markets, Matt Dalgleish.
The TEM processor margin model published last week projected a record loss of $254/head for August kills, considerably worse than the previous month and a record low for the past 20 years (see graph). To rub salt into processor wounds, updates to key inputs in the model for July saw the monthly margin loss increase from $200 to $225 per head.
This has taken the accumulated annual average beef processor margin to $113 loss per head this year, a stark contrast to the $141 profit achieved over 2019, TEM analyst Matt Dalgleish calculated.
While the national heavy steer indicator rise of around 30pc since December was great for producers, it meant cattle going into meatworks costs processors more, he said.
“If meatworks are able to offset some of these cost increases by higher sales outcomes, they can stem their losses. Unfortunately, for processors since December 2019 beef export prices have eased 10-15pc on average across key export destinations,” Mr Dalgleish said.
A range in processor margins between a $60 loss to a $130 profit would be considered relatively normal, he said, while margins above a $230 profit or below a $155 loss would be considered extreme.
“Is it tough in the processing game at present? – yes,” one large export processor told Beef Central this morning. “Is it any tougher than we had anticipated last year? Probably not, because we all knew this was going to happen, and it’s just a matter of riding it out and putting funds aside from the good times to account for it,” he said. “We have to manage it the best we can.”
“It’s led to some drastic measures like that seen at JBS Dinmore last week (dismissing 600 staff and retracting back to a single daily shift) but these are desperate times.”
JBS Dinmore’s new weekly roster of five single shifts per week will see the plant process about 1700 head daily if cattle supply can be maintained – considerably lower than its previous 3-4 day double daily shift configuration.
North-south price gap
A price gap is clearly emerging between Queensland and southern Australian zones recently, so much so that some northern processors have this past week re-commenced buying slaughter cattle out of southern centres like Dubbo, Coonamble and Gunnedah.
The spread in offers between north and south that’s emerged (see quotes above) makes the transport cost of around 20c/kg to deliver the cattle to southern Queensland sheds viable. COVID restrictions in the south may have contributed to the north/south price gap that has emerged, and the reduced shifts being experienced in some NSW plants due to the challenges in sourcing processing staff is also becoming a factor.
It’s not going too far to suggest that labour shortages are indeed influencing cattle markets at present, at least on a regional level.
Kills lift a little
Prospects of rain in some areas later this week could further tighten cattle supply, processors told Beef Central this morning.
Last week’s eastern states beef kill reached 111,899 head, some 23pc behind this same week last year. While the tally represented a 6pc increase, it was coming off a very low base the week before, and included some returns to work among processors that had previous time off.
As some plants come back to work, others are starting short-term closures this week, including Bindaree Beef at Inverell which is apparently closed for two weeks.
Queensland slaughter numbers lifted 12pc last week, as Dinmore returned to work, logging 57,489 head, down 28pc on this time last year. NSW was unchanged at 28,322 head, while Victoria lifted 4pc to 18,917 head. South Australia’s kill fell 17pc to 3331 head, while Tasmania lifted 3pc to 3840 head.
NSW processor Monbeef to close for eight months, due to sustained market pressures
SOUTHERN NSW beef processor Monbeef will shutter its facility for eight months in early January, due to ongoing market pressures.
The closure is a stark reminder of the extreme challenges facing red meat processors this year, with critically short livestock supply after severe drought, and consequent record high cattle prices. Many processors have been logging losses of $200 to $300 a head on adult slaughter cattle for long periods this year.
Monbeef is a small hot boning export plant processing around 150-180 head per day near Cooma, employing around 100 staff. Most of the kill is made up of dairy and beef cows plus bulls, primarily producing frozen manufacturing beef. The US is the plant’s single largest market, with about 70pc of all production exported.
Under the direction of S-Foods, Monbeef management told staff yesterday that after the most extreme year on record, with fires, floods, high cattle prices and the COVID pandemic, a decision had been made to suspend processing. It was announced that the plant would go into a stand-down period for an anticipated eight months from 11 January 2021 – the original return date after the scheduled annual Christmas/New Year closure.
“S Foods made the decision after it became apparent that it was financially unsafe for operations to continue at the plant under the current business environment,” a Monbeef statement said.
During the eight months stand-down period, a small number of essential workers will be retained to ensure that there is a successful transition for the re-opening of the plant.
General manager Rudy Nonis said while the stand-down notice was extremely difficult to deliver, S Foods had advised that this decision was essential for the longevity of the business.
“We have tried looking at different options to keep the plant running, however we have been unable to find an alternative. This is by far the hardest thing that Monbeef management has had to do in the history of its operation,” Mr Nonis said.
All current staff will be compensated until 17 December and will be contacted prior to re-commencement of operations, and provided with the opportunity to recommence work at the plant, should they be interested, he said.
Monbeef’s plant was commissioned in 1998, becoming the first purpose-built hot-boning plant constructed in New South Wales, using the latest hot-boning design and technology. The plant sits on the same site as the earlier multi-species facility operated for many years by Frank Ripzsam and the Dorahy brothers.
In recent years significant investment has been made in introducing new technology and equipment to improve efficiency and allow an expanded range of products and packaging options.
Since the arrival of widespread rain back in March/April across eastern Australia, slaughter cattle supply has tightened dramatically, leading to widespread industry speculation that longer-term plant closures would follow at some point.
Monbeef has been operating for an average of four days each week for the past six or eight months.
Livestock price key factor
Australian Meat Industry Council chief executive Patrick Hutchinson said a range of factors had contributed to the Monbeef closure, but price (driven by availability) of livestock was a key factor.
“But there are other factors, as well. The Aussie dollar currently sits around US74c, its highest level for some years, which reduces the competitiveness of Australian exports.”
“Frozen beef exports, across the board are down about 30pc this year.
Asked whether more log-term processing plant closures were on the cards, given current trading conditions, Mr Hutchinson said AMIC was talking with its processor members regularly.
“Normal Christmas/New Year shut-downs appear to be on track for export plants, and there is no suggestion yet that new season openings may be delayed in 2021. But we have to steel ourselves to the prospect that other processing facilities may close next year, because cattle supply is likely to remain very tight for the foreseeable future,” he said.
“A big summer wet season across eastern Australia, as predicted by BOM, would only make supply conditions worse,” he said.
SE Asia Report: Backlash from importers and consumers against rising prices
86th Edition: January 2021
- United backlash from importers and consumers against rising prices
- Aussie cattle prices climb even higher driven by domestic demand
- Covid 19 second wave across S E Asia dampens consumer demand
Indonesia: Slaughter Steers AUD $4.31/kg live weight (Rp10,800 = $1AUD)
Slaughter steer prices continue their upwards movement within the government’s approved range of Rp46 to Rp48,000 per kg live weight.
Using a range of January prices from Lampung to Bandung, I have set the indicator rate at Rp46.5 for this month. I am advised that the government has also capped the retail price of fresh beef at Rp130,000 per kg for wet markets in the West Java region.
Unfortunately these rates are nowhere near enough to keep up with the continuing prices rises from Australia forcing both importers and butchers to absorb significant losses in order to keep trading.
Butchers responded with a three day strike from Wednesday the 20th of January across the greater Jakarta area. As reported in Beef Central, importers have reacted with a plan to import live feeder cattle from Mexico.
At today’s Mexican prices of about USD$2.10 per kg live weight farm gate combined with the use of the largest vessels, each carrying a little over 20,000 head, the preliminary sums appear to add up with an estimated CIF price of less than the current Australian import cost of around USD$3.80 CIF Jakarta.
The immediate challenge for Indonesia is to establish a workable health protocol from Mexico followed by the coordination of the financing which will require large sums to be committed many months before the Mexican feeders will be received, fattened and sold.
Internet photo of Mexican feeder cattle from Losagronegocos.UY. magazine showing that the types of cattle available are similar to those sourced from Australia.
Given the very unattractive options of continuing loss making imports from Australia or embarking on a high risk Mexican venture, it is fortunate for Indonesia that they have the option of importing cheap frozen Indian buffalo beef.
The quality of this product is clearly inferior to fresh beef but it still represents a high protein, red meat alternative which can be sourced in large volumes and distributed across the archipelago through well-established supply chains.
I am told that there is a substantial quantity of buffalo beef in Indonesian cold stores while Reuters reported in late January that the Ministry of Agriculture intended to import a further 100,000 tons of frozen product from Brazil and India to ensure supplies through the rest of 2021. A surge in smuggling of Indian buffalo from Malaysia to Medan across the straits of Malacca will also help to boost supplies.
With feedlot capacity down to 35-40 percent, imports of alternative sources of beef need to be expedited to ensure shortages don’t arise later in the year. 2021 Ramadan commences on 12 April with the Lebaran holiday from 13 May.
Beef is not the only commodity causing problems with rising prices.
Indonesia imports a large volume of its soybean requirements from the USA where prices have risen sharply in recent months. Soybean importers are required to sell their product at the Department of Agriculture ceiling price of Rp8,500 per kg while the average import price is currently Rp9,500. The faltering world economy, hammered by the impacts of Covid 19, political posturing and seasonal factors has precipitated multiple disruptions to world supply chains resulting in food price inflation across the globe. This is a new reality that consumers and governments will be dealing with for decades to come. Volatile food production simply can’t keep up with the consistent rise in world demand.
At the end of 2020 monthly cattle imports to Indonesia from all Australian ports were around 20,000 in November and 34,000 in December producing an annual total of around 467,000. Considering the difficult import environment at the beginning of 2021 it would not be surprising to see this figure reduce to somewhere closer to 350,000 for the coming calendar year.
Darwin feeder steer prices continue their spectacular rise, shooting past $4 with quotes of $4.10 not uncommon and even a reported bid for a small consignment at $4.25. These sort of prices cannot last as none of our customers can afford them so an eventual decline is certain although it is unlikely to arrive until the northern dry season commences in May. In the meantime, a huge wet season, low national herd numbers, demand for feeders to eat the grass in southern Australia and the disappearance of “surplus” heifers from the feeder market to commence herd rebuilding are all working together to hold Australian domestic prices stubbornly high despite falling demand from importers.
Prices for cattle in Townsville are following a similar trend with slaughter stock suitable for Vietnam selling for around $3.90 per kg live weight while feeder steers are likely to cost $4.10.
In my last report I included a request for assistance with the cost of translation into Bahasa Indonesian. This appeal has been successful with a number of offers received. I accepted the first offer which was from the PT Arsi Indo Graha company based in East Java which supports the Indonesian beef slaughter industry through the introduction of safe and improved slaughtering practices from Australia. I am very grateful to this company for their support and also to the other companies and individuals that offered their kind assistance.
Vietnam: Slaughter Steers AUD $4.56 / kg (VND17,770 to $1AUD)
Slaughter steer prices are up again for the third month in a row with this month’s increase reduced to an average of Dong1,000 to produce an indicator rate for January of D81,000 per kg live weight.
There continues to be a large difference between prices in the north and the south with Hanoi rates for 500kg steers from D81 to D86,000 per kg while HCM city range is D78 to D80,000.
Bulls are more expensive due to their low fat content at Dong 83-85,000 per kg live weight. These prices have resulted in a collapse of demand with abattoirs in the south killing a majority of local cattle while in the north slaughter numbers are much reduced in line with falling demand. National feedlot capacity is down to 60% and expected to decline further over the coming months. Vietnamese consumers appear to be refusing to pay higher rates for retail beef resulting in a rapid drop off in demand for Aussie imports. My reporter advises that retail rates are essentially unchanged over the past six months.
The national Tet holiday runs from February 10th to the 16th this year with the sharing of special meals with family members one of the most popular activities. Vietnam is under unusual pressure during this Tet period through a combination of diseases causing serious disruption to their national economy including a second wave of Covid 19 in the north along with the ongoing African Swine Fever (pigs) and Lumpy Skin Disease (cattle) reducing the supplies of popular foods across the region.
November cattle imports were about 33,500 while numbers declined in December to just over 20,000 head to produce an annual total of about 297,000. On the assumption that cattle prices remain strong for the beginning of 2021 it would not be surprising to see imports fall back to 250k or less for the current calendar year. Live buffalo from the NT are substantially cheaper than live cattle so there may well be a significant increase in buffalo exports to reduce the overall cost of shipments.
Photo from Vietasiatravel.com. Tet lunar new year celebrations.
Following my request for funding for the Indonesian translation, the Northern Territory Buffalo Industry Council Inc. has very kindly offered to translate this report into Vietnamese as this is a major destination of Northern Territory buffalo live exports.
China: Slaughter Cattle AUD $7.29 / kg live weight (RMB 4.98 = AUD$)
Once again, slaughter cattle prices were relatively steady with an average of Y36.3 for Beijing and Shanghai. The Chinese New Year, the year of the Ox, runs from the 12th until the 26th of February in 2021.
Retail beef prices increased by about 3-5% in Beijing and Shanghai for both the wet markets and supermarkets. Pork prices also rose by similar levels in both cities. My advice is that this is due to a combination of factors including Chinese New Year holidays, Covid 19, reduced box beef imports, African Swine Fever and a traditional trend for increased consumption of beef during the winter months.
Philippines : Slaughter Cattle AUD $3.51 / kg (Peso 37.0 to AUD$1)
Correction. As a result of a number of comments that the live slaughter cattle prices in my report were too high I contacted my source and have finally discovered the error which was essentially a language issue where my request for a live slaughter cattle price was not clear enough. This has now been corrected and a new price has now been provided which I hope and expect is in line with the rest of the cattle prices across the Philippines. Any further feedback to confirm this would be appreciated.
The new slaughter cattle price is 130 peso per kg live weight which converts to AUD$3.51 per kg. This price is derived from Mindanao so it may vary from prices in other parts of the Philippines. I have adjusted the graph above and included the prices for the last two months to begin a new record.
For the 2020 calendar year a total of 20,800 cattle were imported which is an increase or around 30% on the previous year.
Thailand: Slaughter Steers AUD $4.37 / kg (Baht 23.1 to $1AUD)
Slaughter cattle prices declined this month on slow demand which may well be a result of the recent surge in Corona virus cases. Slaughter rates slipped from 105 to 101 Baht per kg live weight during January while feeder prices fell even further from 130 to 120 Baht per kg live during the month.
As the graph below shows, Thailand has done well to keep its Corona infection rates to a low and manageable level for most of 2020 until December/January 2021 when cases have surged to over 800 per day.
A happy beef coincidence
See the photo below from my December report showing some of the dry aged, grass fed Hereford beef presented at Neil’s Meats in the Prahran market, a suburb in east Melbourne. I thought it was a particularly fine display so I took this photo when my sister took me there just before christmas. Two nights ago, Lach Mackinnon very kindly asked me to his home for dinner (in another east Melbourne suburb). When dinner was served, his wife Sophie explained that the perfectly cooked, bone-in ribeye she prepared was Hereford beef from Neils meats in Prahran. Absolutely magnificent. Thankyou Lach and Sophie. And thankyou to the Hereford producer and Neil’s Meats. After eating every delicacy over the Christmas period there simply is nothing better than the best quality beef, cooked to perfection. Sorry turkey, lobster, chicken, lamb, pork etc. it’s an unfair contest because beef is so far in front it can’t be matched.
These figures are converted to AUD$ from their respective currencies which are changing every day so the actual prices here are corrupted slightly by constant foreign exchange fluctuations. The AUD$ figures presented below should be regarded as reliable trends rather than exact individual prices. Where possible the meat cut used for pricing in the wet and supermarket is Knuckle / Round.
|Indonesia||August 20||12.15||13.83 B$7.47||2.99||3.83|
|Rp10,700||Sept 20||12.43||13.55 B$7.48||3.27||3.83|
|Rp10,500||Oct 20||12.38||15.05 B7.62||3.14||4.05|
|Rp10,350||Nov 20||12.56||15.27 B7.25||3.57||4.17|
|Rp10,700||Dec 20||12.15||14.77 B7.48||3.55||4.21|
|Rp10,800||Jan 21||12.04||14.63 B7.40||3.52||4.31|
|China Beijing||August 20||17.20||18.92||3.52||6.82|
|Pork per kg||Sept 20||20.82||24.08||3.57||7.76|
|Beijing Y62||Oct 20||21.88||25.00||3.58||7.92|
|Darwin Feeder Steer||June 19
|Feb 2020 $3.80||March 2020
Greenhams shutters part of its Tongala processing plant
ANOTHER southern Australian beef processor has closed part of its operations, in the face of extreme cattle shortage and record high livestock prices.
HW Greenham has confirmed this morning that it will indefinitely close one of two lines at the company’s Tongala hot-boning plant in the Goulburn Valley in northern Victoria. Fifty-nine staff have been laid-off as a result of the move.
Tongala at full capacity processes around 700 head per day under a hot-boning system, mostly cows and bulls. The move would reduce capacity through the Tongala facility by about 50pc, Beef Central was told.
Spokesman and company managing director Peter Greenham Jr said Greenhams was considering its options over the next four weeks on what it would do with the remaining line.
“At this stage, we are just going to be running the one line,” he said.
“It’s all due to scarcity for cattle and extreme high prices for those that are available,” Mr Greenham said. “Generally we have slaughter cattle around us at this time of year, but this year it is unprecedented.”
Good slaughter cows have sold in the region recently at anywhere from 550c/kg to 600c/kg carcase weight equivalent, and cull bulls, much the same.
Whereas the Tongala plant was previously doing 3-4 days a week using two lines, the objective would now be to cut back to a single shift killing five days, to retain a ‘core group’ of skilled staff, Beef Central was told.
Processors say one of the biggest unseen impacts of plant closures due to the current tough trading environment was the loss of skilled staff, who could take ‘months and months’ to reassemble once a shuttered plant tried to start operations again maintain.
“Retaining our core skilled staff was a key consideration in this decision,” Mr Greenham told Beef Central. “We desperately want to retain those people who have been with us for a long time.”
In early December, southern NSW processor Monbeef announced plans to shutter its facility near Cooma for eight months from early January, due to ongoing market pressures. Both closures are a stark reminder of the extreme challenges facing red meat processors this year.
With mounting financial pressures on processors due to record high cattle prices and flat international meat trading conditions, it has been widely anticipated that more plant closures would occur during 2021.
Mr Greenham said his company would look at the Tongala site over the next four weeks, hinting that the company “may do something in the future which would be positive for the area.”
Greenham operates three southern beef abattoirs at Tongala and Moe in Victoria, and Smithton in northwest Tasmania.
Processors racking up big losses
After two years of drought across large parts of eastern Australia from 2018 to early 2020, the national beef herd crashed to 30 year lows, driving up the price of slaughter and store cattle.
Many processors have recently been logging losses of $200 to $300 a head on adult slaughter cattle for long periods this year.
Analysts at Thomas Elder Markets reported recently that December monthly processor margins had shown a ‘slight improvement’ after a spending much of the latter half of 2020 with margin losses exceeding $200 per head. The TEM theoretical beef processor margin model posted an average loss of $189 per head for the final month of the year to bring the annual average margin to a loss of $129 for the 2020 season.
The 2020 annual average loss mirrored a $129 loss recorded during 2016 and $121 in 2017, during an earlier herd rebuilding phase (see graph below).
“While the 2020 seasonal pattern was similar to the pattern seen in 2016, the pattern set during 2017 showed a gradual improvement in monthly margins as the season progressed,” TEM reported.
Analysis of annual cattle slaughter volumes to the annual average margin shows a good degree of correlation between the two series, with low slaughter volumes often pushing margins into negative territory.
A forecast slaughter of 6.9 million head for 2021 suggested another tough year was in store for beef processors, with TEM calculating a linear line of best-fit suggesting that an annual average loss of $80 on slaughter cattle is on the cards.
Dyson Vaccum @ Buletin Utama TV3
QLD beef plant suspended by China over residue detection
A Queensland export meat processing facility has been suspended from supply to China, following a residue detection found during routine screening in imported meat.
Small traces of an antibiotic sometimes used in treatment of eye conditions in dogs and horses was found by Chinese customs authorities in a consignment of beef processed at John Dee (Warwick Bacon) near Warwick. The plant’s suspension was activated overnight.
“In order to ensure the safety of imported meat products, the customs has officially notified Australia to suspend the export of the company to China, and requires Australia to conduct a comprehensive investigation of the relevant company within 45 days and provide feedback to the Chinese side,” a translation of a statement issued by Chinese customs authority said.
The suspension is unrelated to earlier suspension of four Australian beef processing plants over export documentation issues, or recent Chinese moves to suspend some imported meat suppliers in North and South America whose plants have been impacted by COVID detections among staff.
John Dee packs grainfed beef under its own export brands, but also provides a substantial service kill to a number of other high-end Australian Wagyu and Angus beef supply chains. It is assumed at this stage that they, too, will be impacted by the suspension. John Dee, along with Northern Cooperative Meat Co at Casino, are the two largest Wagyu beef processing facilities in Australia.
NCMC, along with Kilcoy Global Foods, JBS Beef City and Dinmore, lost access to China in May, over documentation irregularities.
The residue detection at John Dee has taken the Australian beef industry completely by surprise, as the drug involved, chloramphenicol, is not registered for use in food animals. Beef Central understands its primary use is as an eye infection treatment in dogs and horses. In the 1980s, it was also used to treat mastitis in cows.
The National Residue Service routinely tests meat samples for chloramphenicol, and no positives have previously been found over the past ten years of testing.
“This is a highly unusual compound to have been detected,” the Australian meat Industry Council spokesperson Mary Wu told Beef Central. “It is a broad spectrum antibiotic that is not approved for use in the food industry.”
As a result of that, there are no prescribed maximum residue limits (MRLs) in place for the compound, meaning any trace detected in testing, regardless of its concentration, is unacceptable.
Some industry stakeholders this morning have speculated that the naturally-derived chloramphenicol may have been ingested by a beast from grass fungus spores, or other sources. Some research literature supports this possibility.
“We think that’s highly unlikely,” Dr Wu said. “If it was more prevalent in this way, logic would say that would show up in NRS testing,” she said.
Australian authorities are now investigating the detection, and most report back to China within 45 days. Australia has a robust system of investigation for such matters through the NRS, to provide assurance around such issues.
How long John Dee’s suspension remains in place is unknown.
25 August 2020 – Celebration party for 33rd anniversary of foundation of Kumpulan Tadmansori just began at Tadmansori Seoul Center…
Tadmansori Seoul Center opened just before on the occasion of 33rd anniversary of Tadmansori foundation.
Congratulation on the 33rd anniversary .
Limited persons were invited to one of most luxerious restaurants near Tadmansori Seoul Center to share dinner for celebration.
We can do well in the COVID era
Promo Restaurant Slasih
Victorian processors limited to two-thirds of capacity, under tight new Govt rules
VICTORIAN meat processors will have to cut back production by a third and implement significant workplace safety measures after midnight Friday this week under new Stage Four COVID-19 restrictions announced by the Premier Daniel Andrews today.
In an effort to slow the growth of community coronavirus transmission across the state, the Premier this afternoon outlined the businesses that will stay open, have to curtail operations or close, for the next six weeks.
Retail outlets except for those that are related to food and essential services will have to close, except for those equipped for take away and drive-through, but Mr Andrews said businesses able to remain open in a scaled-back form will include meatworks.
“We know that meatworks are a really significant challenge for us,” he said.
“Whether it be lamb, poultry or beef, they will move to two thirds production, so they will reduce their production by one third, and those workplaces will look very different.”
“There will be some of the most stringent safety protocols that have been ever put in place in any industrial setting.
“Those workers will be essentially dressed as if they were a health worker – gloves and gowns, masks and shields,” Mr Andrews said.
“They will be working in one workplace only, they will be temperature checked, they will be tested.
“It is a proportionate response to the risk that that industry poses, but given the critical part in keeping Victorians fed and indeed, the nation fed, given that so much activity hubs out of Victoria, particularly given the drought and other challenges in other parts of the country, it is not possible to go below that two-thirds level,” Mr Andrews said.
“Cutting production by a third we still believe that people will able to have access to the products that they need.
“Again I can’t guarantee that every single product at exactly the volumes that you might like to buy will be there, but there will be enough for people to get what they need – not necessarily what they want, but what they need.”
Today’s result is considered the best possible outcome by some processors, who feared the government might enforce total closure of meat processing in the state, following the spiralling COVID relapse. More than 300 Victorian meatworkers have been sickened by COVID-19 since April. leading to a series of plant closures.
Meat processing is one of a number of sectors which will operate under restricted conditions under the Victorian Government’s Stage Four Restrictions. Others include cold storage, distribution centres, warehousing and construction.
The Australian Meat Industry Council said it had been advised that the restrictions, which take effect at midnight on Friday, included meatworks moving to 33 percent reduction of peak workforce, and increase the utilisation of PPE, temperature testing and other COVID-safe work interventions, most of which were already in place in all Victorian processors prior to today’s announcement.
“AMIC has been lobbying tirelessly on our member’s behalf to ensure that we remain as an essential service in the supply of food,” AMIC chief executive officer Patrick Hutchinson said.
“The impact of these restrictions in Victoria, AMIC believes will lead to a 30 percent reduction in supply chain throughput overall, based on discussions with our membership.
“It is our opinion that this will lead to a reduction in saleable meat in the Victorian community,” he said.
Butchers to remain open
AMIC said it welcomed the Victorian Premier’s announcement yesterday, which confirmed that independent retail butchers will remain open across greater Victoria, being recognised as an essential service. 45pc of independent local butchers and wholesalers supply essential services, including nursing homes, hospitals or hotels.
AMIC would like to reiterate to all Australians that our members are committed to producing high quality and safe products. According to the World Health Organisation, other international health and food safety authorities, as well as both Australian and New Zealand Governments, there is no evidence that consumers can become infected with COVID-19 through food or food packaging,” it said.
Victorian Farmers Federation president David Jochinke said VFF and agriculture recognised the gravity of being one of the few industries permitted to continue under Stage Four restrictions.
“We understand the trust that has been placed in our sector and that we are accountable for keeping Victorians fed during this state of disaster.
“We have been in constant talks with government to advocate for farmers and ensure that decision-makers understand the importance of keeping the food supply chain open and those discussions have ramped up over recent days,” he said.
“The VFF developed a detailed COVID-19 action plan for our industry which resulted in $410 million in additional Australian and Victorian Government expenditure which has enabled the agriculture industry to continue to operate.”
Mr Jochinke said farmers are becoming increasingly concerned about restrictions to their business and business interruption, labour shortages, freight and logistics problems along with issues around access to inputs.
“We know that continuity of business is emerging as a big concern for farmers which is why our discussions with government have focused on four key principles: bipartisan and comprehensive approach to border issues, smoother flow of goods and services intrastate and interstate, strategies to enable the movement of the agricultural workforce and regulatory change to ensure that agriculture and its supply chain is classified as a critical service,” he said.
AMG completes deal to purchase Cootamundra abattoir
VETERAN meat processor Joe Catalfamo’s Australian Meat Group has confirmed its purchase of the mothballed Cootamundra beef and sheepmeat abattoir on the NSW southwest slopes.
AMG managing director Gilbert Cabralconfirmed to Beef Central this morning that the deal had been completed, and his company would take over the facility in coming weeks. No price was disclosed.
Joe Catalfamo was the owner of the Tasman Group, which sold its six Victorian and Tasmanian processing and lotfeeding interests to JBS in 2008.
Rumours have circulated about a possible sale interest from AMG in the Cootamundra plant for at least 15 months.
The plant has been shut since early 2017, after owners Manildra Group ran into significant livestock supply and price headwinds at the time.
Manildra fought off Chinese investor competition to purchase the Cootamundra abattoir from original owners GM Scott in 2014, not long before the 2015 surge in lamb and cattle prices occurred. The investment was made to diversify Manildra’s agribusiness interests, which include flour and sugar milling, stockfeeds, ethanol production and other commodities.
Through its stockfeeds and by-products connections, Manildra established an integrated grainfed cattle supply chain business a decade ago, and started its investment in the meat sector in 2013 through a joint venture in a retail-ready boning room operated as Argyle Prestige Meats.
Mr Cabral said Cootamundra’s role under AMG’s ownership was still to be determined. “One of its attractions is that it is a multi-species plant,” he said. “We have not yet worked out arrangements for a lamb kill, and will probably do beef only at Cootamundra for the time-being,” he said.
It might take ‘quite some time’ for livestock processing operations to commence, Mr Cabral said. Some refurbishments were likely to take place at the facility before any decisions were made about sourcing slaughter livestock.
He said the plant remained in reasonably good shape, despite being mothballed for the past three years.
AMG currently processes beef only at its Dandenong facility southeast of Melbourne, formerly owned by Castricums, with a capacity of 1500 cattle a day. The company previously processed lambs, sheep and goats at a second facility at Deniliquin, which it closed about three years ago – at much the same time as the Cootamundra plant shut its doors.
Cootamundra is a Tier-Two export licensed plant, the same as Dandenong, giving access to primary markets including the US, Japan and Korea – but it does not presently have approval to supply the China market.
The sale ends a difficult five year stint in the meat processing industry for Manildra’s founder, Dick Honan, with narrow margins caused by limited livestock supply and high stock prices having plagued the business.
At the time of Cootamundra’s closure in early 2017 he said problems were due to a “critical lack of livestock supply and export markets unwilling or unable to pay more for Australian meat.” The plant also lost a larger supermarket retail-ready supply contract the year before.
In late 2018, local livestock industry sources in the Cootamundra area said there had been rumours circulating for several weeks that a Chinese consortium might be lining up to purchase the plant.
Cootamundra at one point processed up to 4200 sheep/lambs and 200 cattle a day, delivering output of up to 800,000 lamb and 25,000 beef carcases each year.
Original owners GM Scott invested $7 million in a major plant upgrade in 2012 through a new processing floor, with a view to upgrading from tier-one to tier-two export status, opening up premium export markets. Cootamundra also employed a retail-ready line producing case-ready MAP and Darfresh packed beef and lamb.
Beef Central asked AMG’s Gilbert Cabral about recent rumours that a South American processor, most likely Minerva, might be sizing up an investment in the Australian Meat Group’s processing assets. Some had linked the Cootamundra purchase with a larger Minerva investment deal.
“There’s nothing in that at all,” Mr Cabral said.
Mars appointed global CEO of Brazil’s Minerva
SOUTH American beef processing giant Minerva SA has appointed former JBS Australia chief executive officer Iain Marsas the company’s first global chief executive officer.
Part of the reason behind the appointment is Minerva’s expansion and diversification of its production platform over the past few years, with 50 percent of total production now occurring outside of Brazil. Unlike some other major Brazilian processors, Minerva is heavily export-focused.
The company in 2016 slaughtered 2.3 million cattle in Brazil, Paraguay, Uruguay and Colombia, generating 580,000 tonnes of beef.
In 2016, the company took a small interest in the Australian red meat industry, buying Brisbane-based non-packer exporter and trading company, IMTP. At time of purchase, the company said the investment in IMTP created an opportunity to integrate beef and sheepmeat supply from Australia and New Zealand into Minerva’s extensive sales and distribution network around the world.
Mr Mars is currently visiting Australia, and was Beef Central’s guest at its table at the Rural Press Club breakfast held at Beef 2018 in Rockhampton this morning. Other guests attending included Andrew Brazier, global head of beef procurement for McDonald’s, former Red Meat Advisory Council chairman Ross Keane, industry analyst and commentator Simon Quilty and former Australian Cattle Vets president, Dr Enoch Bergman.
Minerva’s appointment of Mr Mars and several other high ranking management positions would bring greater operational synergies, promote best practices, and “expedite the process of geographical arbitration and commercial decisions,” the company said.
While not speaking during Beef 2018, Mr Mars has attended a number of seminars, especially those with sustainability as a key theme. He told Beef Central that South America itself was making rapid progress in moving down the sustainability path, backed by verification programs.
In his new role, Mr Mars will have oversight for beef operations in Brazil, Colombia, Argentina, Paraguay, and value-adding business.
Mr Mars first joined Minerva in 2012. He has extensive experience in the processing industry, having worked in the sector for more than 30 years, including two stints in Australia, firstly at the old Darwin export abattoir in the 1970s, and later as CEO of JBS Australia. He has also directed major meat companies in Japan, Korea, Taiwan, Argentina, Egypt, Russia and the UK.
Since returning to Minerva in 2012 he has served in a number of roles, including chief operating officer of the company’s Beef Brasil division and most recently, chief commercial officer.
5 JANUARY 2020 – Tadmansori director, Dato Seri Anggraini Sentiyaki Adnan leads the distribution of food with Tadmansori co-company, PT Barokah Bersaudara.
Dato Seri Anggraini and the company staffs in Jakarta distributes food to the people today in the flood effected area this area badly hit with 8 meters of water.
They giving the food at the most flooded area in Pondok Gede Permai, Jakarta.
Flood reached the second floor of most homes. Almost 8meter high.
4 January 2020 – “My new mosque under construction in Cambodia. This mosque is built for wakaf of both my father and mother.This is the second mosque which I wakaf in Cambodia.insyallah will built more for the Muslim community in other part of the world,” said Tengku Adnan Tengku Mansor for latest Tadmansori CSR for the Muslim world through YAYASAN ALMANSORIAH.
3 Disember 2019 – ABC Radio Australia broadcast.
Batchelor multi-species abattoir officially reopens, ‘blessing’ for NT’s cattle and buffalo industries – ABC Rural – ABC News
The Northern Territory’s cattle and buffalo industries once again have access to a major commercial abattoir, with the Batchelor meatworks officially reopened.
- The Batchelor abattoir has undergone a multi-million dollar refurbishment after being out of action for 16 years
- Stock will be sourced from as far away as the Kimberley, Borroloola and Tennant Creek
- Many international enquiries have been received about buffalo meat
The abattoir at Batchelor, 100 kilometres south of Darwin, has been out of action since 2003, but has been brought back to life thanks to a multi-million-dollar refurbishment by meat company Central Agri Group.
Speaking to ABC Rural as the first animals were arriving on site for processing, Central Agri’s Peter Polovinka said it had taken 18 months of hard work to get the abattoir up and running.
“It has been a hard slog and now we are finally going,” he said.
“It means a lot to me to start processing cattle and buffalo here for the Northern Territory farmers and station owners.
Mr Polovinka said the first consignments of boxed beef from the abattoir will be exported to markets such as Japan, Vietnam and Singapore.
He said the abattoir was hopeful of sourcing stock from as far west as Kununurra in the Kimberley, as far east as Borroloola, and as far south as Tennant Creek.
The NT has been without a major abattoir since the Australian Agricultural Company (AACo) mothballed its $100 million abattoir at Livingstone last year.
Contract musterer Jed Fawcett was on site this morning delivering scrub bulls to the abattoir.
He said people involved in the cattle industry had been very keen to see the abattoir back in production.
“A multi-species meatworks like this will be really good for the Northern Territory and complement the live export trade really well,” he said.
“And for the buffalo industry, this will be awesome.”
Buffalo industry veteran Michael Swart said the NT’s feral buffalo population was on the rise and a meatworks at Batchelor was a “godsend” for the industry.
“At the moment our main buffalo market is sending bulls for the live export trade,” he said.
“We need this to be a success and there’s no reason why it shouldn’t be.
“We’re always getting a lot of enquiries from overseas about buffalo meat, so if they can crack onto that, then it shouldn’t be a problem at all [making this abattoir a success].”
ABC Rural spotted a mob of feral donkeys in a paddock right next to the abattoir on Monday; there have been rumours the Batchelor plant will also be processing feral animals such as donkeys.
When asked about them, Mr Polovinka said the company was not accredited for processing donkeys, but was considering their options.
“Not at this stage, but we’ll look at that in the future,” he said.
Chief executive of the NT Cattlemens’ Association, Ashley Manicaros, said the reopening of the Batchelor abattoir was great news for the cattle industry.
He said since the closure of the AACo abattoir, Top End cattle not suited to the live export trade had either remained in paddocks or had been trucked thousands of kilometres across to the Kimberley Meat Company’s abattoir near Broome, or to abattoirs over east.
“Even though this is reasonably small in size, from an Australian-scale point of view, it allows us to enter a boxed beef export market which is a space we haven’t been able to play in since AACo closed Livingstone,” Mr Manicaros said.
The first cattle are due to be processed on Tuesday and by the end of the week the abattoir should be killing around 120 animals a day.
Next year it is expected to process around 30,000 animals.
The abattoir is currently employing around 40 people, but the company said that would ramp up in 2020.
“We were fortunate enough to pick up some skilled labour from the [previously operating] AACo plant,” Central Agri’s Stuart Brooks said.
“There’s quite a few more resumes here, so hopefully we can get a few more locals on our books.”
Abattoir worker Brett Dooley said he had never worked in a meatworks before, but was excited about his new job which was “about one minute away from my driveway”.
“The economy around here is going to thrive, and it’s been needed for a long time,” he said.
“A lot of businesses around here have been doing it slow and steady
“The abattoir will make Batchelor thrive again and make it worthwhile being here.”
22 November 2019 – Today is a anniversary friendship between our Founder Datuk Seri Tengku Adnan Tengku Mansor and Mr Park Chang Dong, South Korean.
As 90CL beef prices boom, ‘It’s a good time to be an Australian processor,’ analysts say
THE record bull-run in imported 90CL grinding beef prices shows no sign of abating, with the US indicator price climbing to a new record high of A840.6c/kg this week.
Prices for cow meat have now lifted a dramatic 217c/kg when measured in Aussie dollar terms since the start of 2019.
The 90CL (Chemical Lean) US imported indicator is a benchmark price for frozen manufacturing beef into the US. Supply uncertainty over coming quarters and strong global demand are the underlying drivers, enhanced recently by more favourable currency movements.
Chinese demand for meat is having a significant impact on supply and demand dynamics around the world, MLA said in commentary this week. Through 2019, China has quickly accumulated market share among key global exporters. This buying power is likely to continue, maintaining pressure on traditional markets, such as the US, MLA suggests.
Cow prices at three-year highs
Demand for manufacturing beef has overtaken female cattle supply as the major driver of prices, with the eastern states medium cow indicator this week rising to its highest level since 2016.
From the beginning of 2007 to the end of 2014, the NLRS medium cow indicator averaged 131¢/kg liveweight. From 2015 to 2018, the indicator rose to an average of 214¢/kg and since June this year, it has risen again to an average of 222¢/kg.
Seventy percent of cows sold though saleyards have been purchased by processors in 2019, predominately destined for overseas markets. This means that while domestic competition is important, it is the global demand that is ultimately driving the medium cow indicator higher.
On Tuesday the eastern states medium cow indicator rose to 247.25¢/kg liveweight, the highest it has been since 2016. The strength of current prices is remarkable when taking into consideration the severe drought that has resulted in high levels of female cattle slaughter seen during the past 12 months. Some of the top prices for medium cows seen this week included 264¢/kg at Wagga on Monday, 278¢/kg at Roma and 255¢/kg at Shepparton on Tuesday.
With question marks regarding US domestic supply next year and the seemingly ever-growing demand for beef from China, buyers are using forward sales tactics to secure supply and purchasing lean primal cuts, such as knuckles and insides, driving import prices higher.
90CL/cow price spread widens
The 90CL premium (spread between the saleyard medium cow indicator and US imported 90CL indicator) is now at A356¢/kg – the largest spread seen since December 2014.
With the Australian herd still in a liquidation phase, high 90CL prices provide reassurance that demand shouldn’t recede any time soon, MLA said in commentary this week. If a decent break in the weather was to occur, reinvigorated restocker interest would compete with the slaughter market, causing the medium cow indicator to rise sharply, again closing the spread on the 90CL price.
Typically, the Australian medium cow indicator responds to movements in the lean manufacturing beef market. As global demand bids up the price of US imported beef, the Australian market has found support despite challenging seasonal conditions and elevated female slaughter. In times of high cow turnoff, strong 90CL prices add value which would likely be missing otherwise, MLA said.
Lean beef price continues to climb the ladder
In its weekly market commentary, US market analyst Steiner Consulting said lean imported beef prices continued to climb the ladder, as offerings have been consistently short of bids and some market participants have found it increasingly difficult to cover needs.
“It is important to recognise that market shorts are not just traders that have promised to deliver product at a given price, even though they had yet to purchase the product,” Steiner said.
“The biggest shorts in the market are processors that have committed to deliver finished product to their customers either on a fixed price basis or, more often, on some sort of formula basis. They need to figure out a way how to make that happen. They can purchase fresh product in the domestic market but adjusting the process to using all fresh sometimes takes time,” Steiner said.
Foodservice operators that had a printed menu item but need to purchase the raw material are also said to be a ‘natural short.’
It is those participants that are driving prices higher in the US, as they seek to find price levels that will draw offerings from Australia, New Zealand, Central America or South America.
“Effectively at this time we have a bidding war between US and Chinese buyers for what is an uncertain supply in the next three to four months,” Steiner said.
“This is a good time to be a New Zealand or Australian processor. Some US end-users appear to have concluded that the best thing to do, at least in the short-term, is to dip into the domestic fed beef supply in order to supplement any potential shortages. While it may be necessary to pay up in order to buy fed domestic beef cuts to make that happen, this is necessary to relieve the pressure.”
“Otherwise the bids for what is are non-existent supplies will simply keep going up,” it said.
Domestic supply availability concerns for Q1
Current US domestic cow slaughter is seasonally higher, mostly due to more beef cows coming to market, Steiner said.
Last week, US cow and bull slaughter was 4pc higher than a year ago and the highest weekly slaughter so far this year.
The main concern for users of lean grinding beef in the US is what happens in the first quarter next year,” Steiner said. “Beef cull cow numbers will be seasonally lower and higher calf prices will slow down the push towards more liquidation. Sharply higher dairy prices and speculation for strong China dairy demand will likely keep dairy culling in check as well.”
While overall US cow slaughter in 2020 is expected to be slightly higher than in 2019, it is possible that cow slaughter in the first quarter may be down as much as 5pc from a year ago.
A big uncertainty in the US manufacturing beef market was what happens if/when Australian beef production declines, especially as more and more New Zealand beef exports are directed into China. NZ’s China exports were sharply higher in September, accounting for about 60pc of all export trade.
Corruption in Malaysia’s Halal Certification Process
By: Murray Hunter
Top officials of Malaysia’s halal certification department have been accused in legal complaints of compromising the country’s Islamic documentation procedures, according to documents obtained by Asia Sentinel. The irregularities call into question whether many of Malaysia’s millions of Muslim consumers are actually buying truly halal meat and generating concern that individuals have put profit before integrity, destroying the reputation of Malaysia’s halal certification system.
Those involved allegedly include Dr. Sirajuddin Suhaimee, a top official who is short-listed to become the department’s next director general (shown above, center, with Munir Hussein, assistant director MUIS, left, and Mohamed Adil Rahman, Oceania Halal Academy and SICHMA auditor, right).
The documents allege that certifiers from the Department of Islamic Development Malaysia, known by its Malay acronym JAKIM, interfered in the internal affairs of an authorized halal certifier, abused power and terminated one of its authorized Australian certifiers without cause.
In December 2017, Russell Summer, with the Melbourne-based Conlan Cummings Lawyers, formally filed a complaint with the Australian Department of Agriculture and Water Resources about the slaughter of animals at the Junee Abattoir in New South Wales on behalf of four employees who worked at the facility between February and October of 2017. Junee Abattoir processes over 10,000 lambs a week for the local and export market.
Halal slaughter procedures at the facility, according to the complaint, allegedly disregarded Syariah law forbidding halal meat to come in contact with non-halal meat. The slaughterers alleged that halal and non-halal carcasses were regularly mixed together to make up short orders and shipped out to Malaysia as well as to domestic customers.
The employees further alleged that animals had died from stunning prior to slaughter, which is unacceptable under Syariah law. In addition, according to the complaint, JAKIM’s authorized halal certifier the Supreme Islamic Council of Halal Meat in Australia Inc (SICHMA) not only had full knowledge of these deviations against Syariah law, but Mohamad Adil Rahman, one of SICHMA’s halal auditors, insisted that the mixed meat should still be certified despite not being slaughtered according to halal procedures. The complaint also details that wages, sick and annual leave were withheld from the four slaughterers, mandatory taxation summaries were also denied, and that the four workers were unfairly dismissed. One of the four was injured at work and was told to contact Mohamed Adil Rahman, who is taking on the dual role of a labor contractor to Junee Abattoir as well as the halal auditor, allegedly a conflict of interest.
These are described as important human rights violations in Islam as the hadith “Pay the worker his wages before his sweat has dried” indicates. This should have been of great concern to any halal auditor and JAKIM as the body responsible for halal integrity to Malaysian consumers.
Mohamed Adil Rahman is alleged to have been present regularly at the Junee Abattoir in addition to being the director of another halal certification body called Global Halal Trade Centre, along with the Oceania Halal Academy in Australia while running training courses for JAKIM-certified abattoirs. Oceania Halal Academy is a strategic partner with JAKIM. A source within the industry told Asia Sentinel that Sirajuddin has used Oceania Halal Academy in China for many training and certification jobs in preference to Malaysian trainers and halal auditors. He is also widely known within the Australian industry to have a close personal relationship with Sirajuddin.
The Islamic Co-ordinating Council of Victoria (ICCV), a non-profit halal certifier representing local mosques, Islamic schools and charities, alleged in a written complaint to both the minister Mujahid Yusof Jawa and the Malaysian Anti-Corruption Commission (MACC) that Sirajuddin had abused his powers through interfering in the internal affairs of the council, making demands about who should and shouldn’t be employed in the halal certification audit process, and unfairly dismissing the ICCV as a JAKIM accredited halal certifier. The council is expected to file suit against JAKIM in the near future.
ICCV was re-approved by JAKIM as a recognized halal certification body in Australia in March 2018 to the end of February 2020. In accordance with the ICCV constitution, an election was held for the positions of chairman and board members. The incumbent chairman Esad Alagic stood down and Ekrem Ozyurck was elected as the new chairman. JAKIM was immediately advised of the changes in office holders of ICCV as specified in the accreditation agreement.
The allegations made by ICCV through Melbourne law firm Kennedy Guy include a muddy dispute in which Sirajuddin is said to have sought to in effect make the council his own vehicle by supporting the former chairman over the newly elected one and sending letters through personal rather than official channels demanding the removal of two directors and the operations manager, well beyond his remit as a Malaysian official.
Also, according to the complaint, Sirajuddin allegedly misled the current ICCV board of directors into believing issues had been resolved when they hadn’t been. As a result, the complaint alleges, on September 25, JAKIM sent ICCV a letter of termination as a foreign certification body on findings over the unresolved issues. The ICCV board say they believe they have been deceived, and that there was a lack of procedural fairness based in assisting minority shareholders to make a legal case against ICCV.
The issue is important because Alagic has been under investigation by the ICCV board over accusations of irregular payments made to officers of JAKIM. Over the protests of the new ICCV board, for instance, he was said to have presented Sirajuddin with an expensive golden tasbih (set of prayer beads) purchased in Turkey. Sirajuddin was also said to have requested that Alagic employ his nephew Mohd Ridza Helmi Ramli and Sheikh Ridzuan Shafie Sheikh Musa at ICCV. They were employed for a short period at ICCV until their visa applications were rejected by Australian authorities.
Since the publication on October 10 and October 29 of articles in Asia Sentinel, both the minister in the Prime Minister’s Department overseeing JAKIM, Mujahid Yusof Jawa, and his deputy, Fuziah Salleh, claimed allegations of corruption were baseless and demanded that the Asia Sentinel provide proof of corruption within JAKIM so an internal investigation could be made, rather than allowing the Malaysian Anti-Corruption Commission investigate, as is the usual case in corruption cases.
On November 5, the minister claimed that imposters rather than JAKIM officials were responsible for corruption in the certification process. Sources who asked to remain nameless for fear of retribution, however, told Asia Sentinel that Fuziah had been made aware of allegations against Sirajuddin but is seeking an honorable way out for the director rather than put him under investigation.
However, independently of the minister and deputy minister, MACC Chief Commissioner Latheefa Koya said the allegations of corruption within JAKIM had come to the MACC’s attention and that she will make further announcements as investigations progress.
US imported grinding meat prices hit four-year high
PRICES for Australian imported lean grinding meat in the US have hit a four-year high when measured in Aussie dollar terms, reaching 721c/kg in trading last week.
Not since the US’s significant domestic beef shortage caused by its own earlier drought have prices in A$ reached this level, last seen around September 2015.
Grinding meat prices into the US have gradually improved this year, from around A600c/kg in late January, and A660c/kg in early July.
Strong bidding competition from China for the same product, absence of grinding meat supply to the US out of New Zealand as NZ swings more heavily to supply into China, softer currency and general strong international demand are driving the 20 percent lift in imported Australian 90CL beef prices into the US so far this year.
Currency value has played a part, with the A$ dipping below US67c briefly in trading last week, and sitting for much of the week around 67.6c before lifting sharply this morning to 68.4c. Last week’s currency level was the lowest seen against the US Greenback since a brief period in early 2009 when it dipped below US65c.
In its weekly US imported beef report, US analysts Steiner Consulting said the market for imported lean manufacturing beef used for hamburgers continues to trade very firm, largely because increased competition in the global market means overseas suppliers like Australia can afford to pass on US bids.
Another reason for the firm imported market was that domestic lean beef continued hold value, Steiner said.
“While domestic buyers can look at history and expect a seasonal decline in the value of lean beef to play out, the longer the market continues to trade like this the more anxious US buyers become – and hence the need to have some product around them for fourth quarter (October-December) needs,” Steiner said.
Import volume into the US is lower in September and October, largely because of the seasonal decline in shipments from New Zealand. In the four August weeks for which imported data is available, total imports from grinding beef supplying countries to the US was 36,942t, Steiner reported, down 11,360t or 24pc from a year ago. This is the equivalent of about 630 full truckloads of product that did not arrive in US Ports the last four weeks.
“It is not hard to conceive why imported beef prices were higher, in an environment where there is significantly less volume available to traders and domestic US 90CL is still trading at $225/cwt,” Steiner’s weekly report said.
Economic outlook and risks for imported beef
Strong global demand, mostly from China, has helped prop-up the value of imported beef in the US, causing it to trade at a premium to domestic lean beef for much of the 2019 year.
Steiner said it expected this to be the case for the remainder of the year, especially as Chinese buyers are expected to remain active due to preparations for the Chinese New Year early in 2020.
“The shortfall in pork supplies due to ASF and a consumer shift towards diversifying their meat protein consumption patterns should continue to underpin imported beef prices in the near term,” it said.
However, there were warning signs on the horizon that traders and imported beef suppliers would do well to heed.
“In our view, a US recession presents significant downside risk for imported beef prices in 2020 and 2021,” Steiner said.
“Much will depend on the breadth and duration of any such recession. The global financial crisis in 2008 and 2009 resulted in a lot of beef order cancellations as credit dried up. Demand in the US market also softened, largely due to a slowdown in food service business.”
At a time when domestic demand was getting weaker, more imported beef was offered in the US in 2008-09 as US traders had more liquidity than their competitors in other parts of the world. The result was a quick deterioration in imported beef values.
While at this time the US economy remained on a growth path, the perceived risks of a recession have increased dramatically. The US Federal Reserve’s estimates of probability of a recession show a 32pc recession risk by mid-2020.
The last time the recession risk was this high was in the summer of 2008. The escalation of the trade war with China has certainly skewed economic models. It is also possible that by the end of the year we could see an agreement between US and China on trade, which could bolster markets in 2020 and significantly change the economic outlook,” Steiner said.
The result was a fairly wide range in terms of possible imported beef prices for next year. With a current forecast of $220/CWT forecast for next April, a trade agreement between the two could cause imported beef prices to trade over $250/cwt next northern hemisphere summer, while a deterioration in economic conditions could see prices pull back to $180/CWT, and possibly lower.
More beef in cold storage
Steiner also notes that there was more beef in cold storage in the US at the end of July, as buyers sought price protection. The combined inventory of beef, pork, chicken and turkey in cold storage at the end of July was estimated at 2.464 billion pounds, 1.8pc lower than a year ago but still 5.4pc higher than the five year average. Red meat and poultry supply in storage increased by 2.7pc from June levels, and the total supply of beef in cold storage at the end of July was 455.1 million pounds, 2.8pc higher than the five year average.
It is not unusual for beef inventories to increase in July, in part because the slowdown in beef demand and high slaughter levels result in more beef going into cold storage. We also think that higher than expected beef prices caused some end users to accumulate inventory,” Steiner said.
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