July 3, 2007

Beef herd rebuilding in US, Australia to ease world beef prices

The developing of more beef herds in Australia and US is seen to support global beef prices in 2008/09 according to Australia's Westpac Banking Corporation.

The bank also noted a projected New Zealand dollar will also prevent a hike in farmgate prices this season but a lower kiwi dollar in the longer term will have farmgate prices higher through 2009 and 2010 despite softer world prices as production levels in Australia and the US recover.

US dollar beef prices are around 30 percent above their ten-year average due to droughts, disease outbreaks and trade restrictions. High feed costs - due to drought and expanding bio-fuel production, boosted the US cattle slaughter by 10 percent while drought also boosted Australian beef supply.

According to Westpac, the longer term outlook for world beef is still uncertain will depend on Australia's recovery from drought recovery and the US' re-entry to the Japanese and Korean market until late 2008. CAP reform in Europe should see cattle numbers continue to fall while Russian demand is expected to increase strongly.

Beef prices in the US are expected to remain firm through 2007/08 as demand remains strong and supply tight, especially from Australia and the US. The relaxing of Argentina's beef export ban and expansion of Brazilian and Uruguayan exports may see some downward price pressure.