February 2, 2006

Australian beef benefits from Japan's ban on US beef

Japan's recent ban on US beef is giving Australia's beef industry a boost by pushing up prices, pointing to another good year of exports to the top North Asian market.

Australian beef enjoyed a 90 percent share of the Japanese market after the country banned US beef for two years in 2003. When the Japanese government re-imposed the ban two weeks ago, the Australian beef industry was saved from losing a huge part of that business.

Peter Weeks, chief market analyst at Australia's meat industry authority Meat & Livestock Australia, said the ban definitely helps Australian beef exports in the short term.

Japan's ban on US beef, lifted just a month ago, was reinstated on Jan 20 when spinal material was found in a shipment of US beef. Japan considers such material to be a risk for mad cow disease.

Benefiting from the ban, cattle prices in Australia have boosted the Eastern Young Cattle Indicator to 359 Australian cents a kilogramme on Feb 1, from 349 just before the new ban.  

Initially, Australian cattle prices were expected to decline by at least 10 percent in 2006 due to the loss of market share in Japan. However, the decline is now expected to be less than 5 percent, Weeks said.