March 12, 2007

Australian cattle prices to increase in 2007/2008
 

Lower Australian beef production following the drought, and strong restocker and export demand, is expected to see Australian cattle prices increase by 10 percent in 2007/2008, to 330 cents per kilogramme hundredweight (/kg cwt), according to Australian Commodities released this week by the Australian Bureau of Agricultural Resources and Economics (ABARE).

However, prices are forecast to decline in following years (down 6 percent in 2008-2009 and 20 percent by 2011-2012), as production increases and competition strengthens in key North Asian export markets.

The rebuilding of the Australian cattle herd during 2007-08 will also contribute to the decline in beef production for the year, with herd numbers forecast to recover 2 percent (or 500,000 head), to 28.2 million head by June 2008, after falling 900,000 in 2006-07. The herd increase is forecast to continue through 2008-09 and 2009-10, peaking at 29.1 million head, with numbers then falling back to 28.7 million by 2011-12.

Despite a supply-influenced decline in exports during 2007-08, Australian beef and veal exports are forecast to increase steadily after 2008-09, reaching over 1 million tonnes slaughterweight (swt) in 2010-11. ABARE forecasts beef shipments to Japan to reach 430,000 tonnes swt by 2011-12, an increase of 8 percent on 2006-07 levels, with US access to Japan remaining limited during the medium term. In contrast, after peaking at 161,000 tonnes swt in 2006-07, Australian beef shipments to Korea are forecast to fall back to only 90,000 tonnes swt in 2009-10, as Australian beef faces increased competition from US product.

With reduced cow supplies, Australian beef shipments to the US are forecast to be back 6 percent in 2007-08, to 270,000 tonnes swt. However, increased beef supplies in following years is expected to contribute to beef exports increasing steadily through to 2011-12, reaching a forecast 355,000 tonnes swt.