Western Victoria’s first shipment for this spring of slaughter beef cattle bound for China will be exported from Portland during mid-October with 2000 steers on board
ASX listed Wellard Limited (ASX:WLD) says it has agreed to commercial terms to supply Rongcheng HCMH Trade and Service Co., Ltd, a subsidiary of Tai Xiang Group which is an established Chinese company specializing in frozen and processed food.
The shipment, despite being relatively small, is the largest to date of this type and represents a significant step in the Company’s implementation of its strategy for China”, said Wellard CEO and Managing director, Mauro Balzarini in a statement released Tuesday evening.
“We have been working hard to develop the China market for a long time and I would like to congratulate Wellard’s China Team, and particularly Scot Braithwaite, Bernie Brosnan and Eva Fu for their fantastic marketing effort” Mr Balzarni said.
“We see this as the start of a long-term relationship with clients in China, in the same professional way we have worked closely with our customers in other markets for the last three decades, including establishing ESCAS supply chain integrity with a special emphasis on animal welfare.
“As we have stated before, China offers big potential for Wellard and the Australian cattle industry in general, and we are confident this first shipment will pave the way for the development of a more regular trade and grow our exports to China”.
“This will benefit Wellard’s stakeholders and also producers in Australia as China will import cattle with different specification to Vietnam and Indonesia.”
The cattle will be quarantined at the Kobo, Portland feedlot and following shipment processed in a purpose-built facility in China, which has been ESCAS (Exporter Supply Chain Assurance Scheme) accredited.
The sale contract is subject to conditions precedent including receipt of a deposit and completion of all letter of credit requirements.
The cattle required are Angus and Black baldy steers, 530-630kg liveweight, 0-4 teeth and of slaughter condition. The cattle must be HGP-free and have 90-days residence on the property of origin.
A buy price was not disclosed in the Wellard statement.
UPDATE: Tuesday 11.00am
Overnight reaction to this historic first Wellard/China slaughter steer shipment was relatively positive.
With a quoted price of $3/kg revealed, agents from across Western Victoria and Gippsland have given it the thumps ups saying that in these terms of current softening market prices any new and additional inquiry for slaughter cattle would help to under pin prices.
LMB Linke partner, Bernie Grant, Hamilton said the money offered was “reasonable” on current saleyard valuations . “And, with all the boxes ticked, it will exceed most current grid offer prices (of 530c/kg dressed or 280-285c/kg) which should help arrest any further slide in market prices” he said.
TB White and Sons principal Leo White said prices of around $3/kg for heavier steers and bullocks was a particularly hard to obtain in the saleyards at the moment.
“In fact if the order was known last week before our Ballarat store sale on Friday it may have stopped some of our heavier drafts from being submitted” he said.
South Gippsland’s, Terry Ginnane, Landmark said while the order was encouraging he doubted if many Gippsland cattle would be ready to fit the bill.
“It’s very wet down here and our cattle aren’t ready yet” Mr Ginnane said. “However it seems good money compared to market and the various grid prices “they shouldn’t have much trouble filling it” he said.
“If we could get a constant $3/kg for finished steers it would make the trading of cattle a whole lot easier especially with prices dropping each week like they have. “For some of our traders if the market were to continual to slide they would need to grow their bullocks passed 700kg to get their money back, so this China order will be of great benefit if they can be ongoing”.
Kerr Livestock principal, Michael Kerr, Hamilton agreed the order would serve to place a temporary floor in the market. “It’s another market and another selling option” Mr Kerr said. “But we wouldn’t have a lot that would be suitable as the weather is too wet and our cattle aren’t ready”.
Mr Kerr also expressed concerns about the terms of trade being asked by the live-ex trade. “Asking agents and farmers to wait longer for their money will have an impact on some” he said. It‘s an issue that needs addressing if the trade is to become a regular and reliable selling option” he said.
Dale Keatley, Ray White Keatley Mt Gambier said while their southeast SA bullocks were not ready for sale (too wet) it will be interesting to observe how local processors and feeder buyers react to the announcement.
“How this all unfolds will be interesting” Mr Keatley said.
“If it becomes a regular and an ongoing occurrence local buyers will need to adjust. But if it is irregular and adhoc perhaps nothing much will change” he said.
