July 2, 2007

Australia's 2007/08 beef prices seen to increase as production falls
 

Australian beef are seen to hike its average cattle prices due to tight local production and strong export demand, according to the latest quarterly forecast report released last week by the Australian Bureau of Agricultural and Resource Economics (ABARE).

ABARE said average saleyard price for cattle is seen to increase by 10 percent in 2007-08, to 323 cents per kilogramme hundredweight (/kg cwt) due to decreasing cattle herds brought about by drought and a national effort to rebuild the herd. ABARE is also expecting cattle slaughter during 2007-08 to decline by 8 percent, to 8.3 million head, resulting in a similar decline in production to 2.1 million tonnes.

The production drop is expected to limit Australian beef exports by 9 percent from last year at 890,000 tonnes slaughterweight (swt), despite strong export demand in North Asian and North American markets. On the other hand, live cattle exports are forecast to increase 8 percent to 640,000 head, driven by another favourable production season increasing the supply of suitable northern cattle and strong demand from South East Asia, particularly Indonesia. The value of Australian beef and cattle exports is forecast to remain steady at US$4.4 billion.

The bureau also predicts 2007/08 exports to Japan will decline by 6 percent to 380,000 tonnes swt as Australian supplies tighten and prices increase.

Exports to the Korean market are also anticipated to decline 29 percent to 110,000 tonnes swt, as increased competition from the US is expected to displace Australian beef and Australian domestic cattle price rise. This would still be 77 percent higher than in 2003, prior to the bans on US product.

Despite a lift in US domestic prices, Australian exports to the US are forecast to drop 10 percent to 275,000 tonnes, due to supply constraints.