March 1, 2011

 

Australian beef prices seen to rise on cattle shortage

 

 

The shortage of cattle to graze lush pastures in Australia will push up beef prices in the next two years, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).

 

ABARES says there will be strong demand for young cattle. The bureau predicts an 11% price rise in beef to AUD3.20 (US$3.26) a kilogramme in 2010-2011.

 

That will increase another 5% in 2011-12 to AUD3.35 (US$3.41) a kilogramme.

 

The demand will plateau and decline by 2015-16, with average saleyard price for beef projected to fall to AUD3.05 (US$3.11) a kilogramme.

 

Flooding rain disrupted some sales in eastern Australia, and the young cattle indicator peaked at AUD4.11 (US$4.19) a kilogramme carcass weight in mid January.

 

After years of drought in south-eastern Australia, when the herd declined by 4%, ABARES says producers will be rebuilding herds by more than 2% next financial year to 27.9 million head.

 

The herd size could surpass those records of 2005-2006.

 

Interestingly, due to the better pasture, carcass weights will tip the scales 1% higher in 2011-12.

 

Southern Western Australia has suffered severely in the drought, and producers have dramatically downsized their herds.

 

Due to beef cattle producers in south-eastern Australia rebuilding herds, there will be less stock available for slaughter.

 

ABARES predicts slaughter rates to fall 2% below the decade average.

 

Australian beef continues to find new markets, particularly in the developing world.

 

ABARES expects Russia and South-East Asia to take more Aussie beef, pushing exports 2% higher by volume to 930,000 tonnes.

 

The Japanese consumers will see more foreign beef on their supermarket shelves, but the increase will come from the US, as it continues its marketing push.

 

Sales rise off a low base, since exports stopped with the case of mad cow disease seven years ago.

 

In fact, the Japanese consume nearly a quarter less beef than they did in the year 2000, because of the BSE disease scares in Japan and the US.

 

A record decline in the US cattle herd will improve demand for Australian beef imports over the next five years.

 

Now the Australian dollar needs to fall so exporters can see the benefit.

 

Australian exports to the US are forecast to fall by 15% this year, 2010-2011, but will rise by 6% next year.

 

The Australian Bureau of Agricultural and Resource Economics and Sciences says the US cattle herd is the lowest in 50 years, at 92 million head and could decline further, forcing prices higher.