March 7, 2008

Australian cattle prices to rise further on tight supply

Australia's saleyard cattle prices are expected to increase in the coming year as supplies tighten and producers commence herd rebuilding.

Australian Bureau of Agricultural and Resources Economics (ABARE) reported this week that weighted averaged cattle prices in 2008-09 are forecast to increase 7 percent, to 315¢/kg cwt - the highest average since 2005-06.

ABARE forecast that the country's cattle herd will grow 1.4 percent in 2008-09, to 28.6 million head, and to 29.6 million head by 2011-12.

Underpinning the herd growth will be a 2.3 percent decline in slaughter, with production back 2 percent, at 2.1 million tonnes cwt, the bureau stated.

Australian beef exports are also expected to decline by 4 percent due to a reduction in beef production and the increased competition from US beef in the markets of Japan and Korea.

Lower demand for Australian wheat overseas is expected to drive local beef consumption to 36.5 kg per person in 2007-08 and 37.9 kg by 2012-13.

Meanwhile, live cattle export trade is estimated to remain strong, driven by strong demand in South East Asia and increased northern cattle supplies, with a 7-percent rise in shipments in 2007-08, to 680,000 head and 780,000 by 2012-13.