May 3, 2012

 

Strong US demand for Australian lean beef exports continues

 

 

The chief executive of a major exporter said Wednesday (May 2) that last week's discovery of a case of mad disease in the US will not have an effect on Australia's beef export industry but will continue to benefit from strong US demand for Australian lean beef exports.

 

While Indonesia and Thailand banned some US beef imports since the discovery, both Japan and South Korea, the two big markets in Asia for competing US and Australian beef, continue to import US beef.

 

Richard Rains, chief executive at meat exporter Sanger Australia Ltd., said he doesn't expect much change in trade because of the ban by Indonesian or Thailand which he doesn't expect to last long.

 

"I don't expect we'll see any upside, I don't think America will notice any blip on the radar, I think it's business as usual," Rains told Dow Jones in an interview.

 

There is no change in the risk level of US beef and world trade will continue unabated, he said.

 

Sanger Australia, which sources meat from three large Australian-based processors, supplies 80-100 customers who are mostly overseas.

 

Sanger has been exporting Australian beef since 1973, but is a relatively smaller player in an industry that exports products worth around A$4.5 billion a year.

 

According to official data issued Tuesday, Australia exported 281,182 boneless tonnes of beef in the first four months of 2012, of which Japan took 32%, the US 29%, South Korea 11%, Indonesia 2.7% and Thailand 1.7%.

 

Rains said exports are going very well to the US, hitting 81,054 tonnes in the first four months, up 67% on the year-earlier period.

 

While the mad-cow case may not help, Australia appears to have benefited from another controversy in the US where a major producer stopped producing ground lean beef, known to critics as "pink slime."

 

Australia typically supplies lean beef to the US where it is blended with fatty US trimmings for production of hamburger patties. Rains said the producer in the US was turning out more lean meat in a year than Australia was sending to America.

 

"That's now just evaporated from the US market and they've got to replace that from somewhere and the mostly likely place is Australia and New Zealand," he said.

 

That's been happening over the past 10 months and the US market has been firming over that period, he said. "The US market will have to continue to stay firm to attract the lean meat that they need to blend with their domestic fat."