July 23, 2009

Grim prices ahead of spring are expected for Australia's cattle producers, who are already troubled by years of drought and shortages of feed and water.

Expected price increases did not materialise because of the low Australian dollar, and it did not look like it will happen for a long time, said Peter Weeks, chief market analyst at Meat and Livestock Australia (MLA).

Beef demand has remained flat due to unemployment issues and lesser consumer spending, Weeks said, adding that exports have suffered due to poor global beef demand.

Recent weeks of seasonal tight supplies had helped beef prices but that was temporary, he said.

Cattle producers can hope for a good spring break, but some parts of Victoria are still experiencing bad drought that they will have few stock left to pasture if the season does turn.

Cattle marketings have also declined to a very low level. Auctioneer Graham Fullgrabe said the drought has been going on for too long and many farmers have halved their breeding stock and some are halving that again so they only have a quarter of their usual herd numbers.

Weeks said prices could improve if good and widespread rain was received across southern Australia in the next few months, which could lead to strong restocker buying and potentially some peak prices in September. 

Beef exports also need to improve to help fuel the feedlots and young cattle demand again, he added.