Chinese trading has hit a lull

Chinese trading lull

Stock and Land Beef
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The lull in Chinese buying activity is expected to continue through Chinese New Year until February 8.

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AS Australian meatworks come back on line after the Christmas break, with the December incidence of Chinese buyers reneging on high-priced deals still casting a shadow, the question for exporters now is what does this market have in store next.

Market watcher Steiner Consulting makes the point that while China may have pulled back from the intense demand that skyrocketed prices in late October and November, the underpinnings of China's protein demand are unchanged and their outlook for imported beef remains bullish.

However, in light of recent events, traders would now be very aware that China's dominance of the market and buying patterns can invoke volatility, which, in turn, spells risk.

Trying to mitigate that risk by diversifying sales books is not easy as China represents such a huge portion of global demand and, of course, by definition essentially pays the highest prices.

One major multi-site processor, however, has pursued from the outset a minimal approach to placing product in that market for the very reason of the risk they believe it represents.

They are now in the enviable position of having all their meat paid for, no reneges and no ships turned around while most other exporters, and particularly many smaller operators, are believed to have suffered to some extent.

The current lull in Chinese buying activity is expected to continue through Chinese New Year and associated festival period which runs from January 25 to February 8.

Buyers are then expected to return to the market with orders for the second quarter.

Meanwhile in Queensland, as happened last year, Townsville has reopened early with a start made on Tuesday this week.

One major multi-site processor has pursued a minimal approach to placing product in that market for the very reason of the risk they believe it represents. They are now in the enviable position of having all their meat paid for, no reneges and no ships turned around while most other exporters, and particularly many smaller operators, are believed to have suffered to some extent.

Mackay started its kill on Monday.

At Rockhampton, Lakes Creek starts on Friday and Nerimbera on Monday. Biloela has been back since last Friday.

Beenleigh returned to double shift at the beginning of January and Oakey resumed at the same time. Dinmore started last Friday.

Southern Queensland grids this week show 560c for 4-tooth ox and 460c for heavy cow. Rockhampton rates were either on par or 10c off. Both locations are reported to be reasonably well placed for cattle.

Southern NSW and SA grids indicate 515c for ox and 430c for cow.

Fodder pours in to Victoria's bushfire areas

COUNTING THE COST: As access to some areas of the Gippsland bushfire is still restricted, it will be some time before a comprehensive assessment of losses can be made. Picture: Chris Brereton

COUNTING THE COST: As access to some areas of the Gippsland bushfire is still restricted, it will be some time before a comprehensive assessment of losses can be made. Picture: Chris Brereton

IN the space of a short 15km journey last Friday, Warragul (West Gippsland) agent Roger Tweddle counted 33 hay trucks.

Some were loaded going east toward the fire ravaged country and some were returning empty to turn around and go again.

The contrast between East and West Gippsland could not be any starker.

Roger said East Gippsland had been in drought for three years without a break.

The mountains are so dry and loaded with highly combustible understory from lack of load-reduction burning that outbreaks were inevitable. Warragul, on the other hand, received 50 millimetres (two inches) of rain in the past fortnight.

The season has been good to the extent that paddocks have been cut up to three times for silage and hay and are still green and able to be cut again.

This is allowing people like Roger to cut and donate truck loads to those in need.

He said the good season in West Gippsland extended south around Leongatha and in the western part of the state the coastal country around Warrnambool had experienced a good winter and was in pretty good shape.

The season in Central Victoria was described as ordinary but in the Western Districts it appears to have been good enough to get a crop. That has led to the unusual situation of Victoria bringing in a bigger wheat crop than NSW.

As to the impact of the fires on productive country and livestock, the only information available related to Kangaroo Island off the coast of SA where stock losses, mostly sheep, were estimated at 30,000 head, with more than half of the island burnt out.

In the mountain country around Ensay he knew of one particularly good Hereford herd that has so far been spared but is by no means out of danger.

As access to some areas is still restricted, it will be some time before a comprehensive assessment of losses can be made.

What is known, however, is that the fires were incredibly hot.

One image captured was that of an expensive motor vehicle with aluminium alloy body panels which had melted and dripped away in little rivulets. Considering unalloyed aluminium melts at 660 Celsius and higher for alloys, it was obviously a very hot fire.

Further evidence is the lack of charcoal in the aftermath, just fine talcum-powder dust which could hardly even be called ash.

Because of this intensity, it is thought that a lot of the trees that have been burnt will have died and will not regenerate.

Having seen first-hand the effect of very hot fires years ago where trees have not regrown, Roger is inclined to the view that this will unfortunately be the case in many parts of the mountain country this time around.

At the same time that the bushfire disaster is unfolding, Victoria is in the midst of its seasonal turnoff of slaughter cattle and the big mountain-district weaner sales are not far away being due in March.

How the fires affect the latter remains to be seen but those with slaughter cattle to sell who don't have kill space booked may find they will be holding their bullocks a bit longer than anticipated. Roger said the latest advice from two major operators is that the earliest they can offer space is the end of March.

In the saleyards on Monday the best of the bullocks on offer made 287c/kg and averaged low 280s. Best of the heavy cows were in the 230-240c range and averaging low 220s.

At Pakenham last Thursday, best Angus feeder steers 300-400kg made 340-350c/kg with the general run mostly around 300c and plainer descriptions discounted to around 220c.

The story Chinese trading has hit a lull first appeared on Farm Online.

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