May 15, 2006

 

Australian beef cattle prices fall amid lower export demand
 

 

Beef cattle prices in Australian saleyards fell slightly last week due to various factors, Meat & Livestock Australia Ltd (MLA) said Friday (May 12).

 

One factor was the lower quality of beef offered.

 

The quality of cattle is starting to deteriorate due to the end of autumn when pastures wither. Producers are choosing to sell now rather than allow the condition of their animals to worsen.

 

Other factors cited include an expectation of increased supplies in coming weeks, a stronger Australian dollar and lower export demand, MLA said.

 

Since two-thirds of Australian beef production is exported, it greatly influences prices in domestic saleyards.

 

Australian beef has seen the strongest growth in Japan and South Korea, markets vacated by the US due to mad cow disease. Even though peak demand periods during the Golden Week holidays are over, strong export demand still exists and prices are rising, according to MLA.

 

MLA noted that the US may try to re-enter Japan's market in June, but it expects that it would take months. Meanwhile, beef supply would remain tight over Japan's summer and would be strengthened by demand for barbecue cuts, it said.

 

As for South Korea, demand is slowing as the government has announced the impending arrival of US beef in June, MLA noted. Still, South Korean demand was strong this week due to a large number of public holidays in May, MLA said.

 

In the US, an oversupply of beef has weakened prices in recent months, MLA said.

 

In the case of 90CL domestic beef, prices are currently around 15 percent below year ago levels. The decline was less drastic on the imported beef side, where prices have fallen 5 percent below year ago levels.

 

Import prices were holding steady this week as exporters refused to accept lower bids due to a strong Australian currency and high cow prices, it said. The market is anticipating higher consumption during the Memorial Day long weekend on May 29.

 

According to Steiner Consulting Group (SCG), beef prices in the US are expected to fall 3 percent, due to weaker local demand and a lift in supply.

 

SCG's quarterly forecasts point to higher cattle slaughter levels (up 3.2 percent) and heavier carcass weights (1.4 percent higher),

 

These factors would combine to result in a 4.7 percent jump in beef production in 2006. Production is projected to rise by a further 2.5 percent in 2007.