Manufacturing market drives Australian cattle prices

Australian cattle markets were generally firm this week, consolidating last week's gains, despite a rise in numbers yarded.

This strength, despite a drier period, comes principally from a surge in global prices for manufacturing beef and cheaper frozen cuts.

Since its low point last October, the price of 90CL cow beef to the US has risen almost 40% in Australian dollar terms, driven by a general lift in cattle and beef prices in the US, Russia's re-entry and weaker competition from South America.

Over the same period, export cow prices in Australia have only lifted 11%, restoring export margins on this grade of product. Some recovery in hide prices has also assisted margins.

However, processor/exporter margins on the quality beef trades remain depressed, with the export price for chilled grassfed full sets to Japan only 3% higher than a year ago.

Meanwhile, beef production in Australia fell 2.6% in the first three months of the year and was 6.3% down on a year earlier, according to the Bureau of Statistics. 

Beef production came in at 497,306 tonnes for the quarter, while 1.83 million cattle, excluding calves, were slaughtered, which was down 2.7% on the previous three months and 7.6% over the year. Live cattle exports fell 22% to 204,000, according to the ABS figures.

Australia exports two-thirds of its beef production to the major markets of Japan, the US, South Korea and Southeast Asian nations, with the level of exports closely tied to production. It is the world's second largest beef exporter after Brazil.