Takeover potential, page-5

5 vessels,

Ocean Ute: 5,000 cattle capacity, currently on the way from Townsville to Vietnam
Ocean Outback: 6,000 cattle capacity, currently on the way from Darwin to Indonesia
Ocean Drover: 20,000 cattle capacity, loaded up from Portland and Geelong and on the way to New Zealand to collect more cattle.
Ocean Shearer: 20,000 cattle capacity, Moored and loading cattle from Brazil, port of Sao Sebastiao
Ocean Swagman: 6,000 cattle capacity, waiting for load cattle from brazil Salvdor

For H1 FY17, Ocean ute, outback and drover may focus on Asia market and Shearer, swagman may collect cattle from Brazil and Uruguay to middle east (Turkey, Israel, Egypt, Jordan), and it seems like Wellard brazil company find a good partner in Turkey and they demand large number of cattle from Brazil (more than 30,000 cattle in past 3 month). We will know what happened in Turkey in Annual report.

When China market open, Indonesia market and Vietnam market will be reduced but Wellard can still export cattle from new sourcing market Colombia to Vietnam which margin is better because of less competition in Colombia. So, I think from next year, Vietnam and Indonesia customer will have to pay more to get Australia cattle, otherwise Chinese importer will buy as much as they can. However, there is always some customer want to pay high in Indonesia and Vietnam, but the different is as demand of Australia cattle increase, Wellard can win some bargaining power which means increase ability to transfer extra sourcing cost to customer. If customer in Indonesia and Vietnam is high resistance for increasing cattle price, Wellard can say, I am sorry, we are not able to source cheap cattle, we cannot trading at loss, Chinese buyer are happy to buy expensive cattle, we will trade to them.