August 8, 2006

 

Australian exports to Japan and South Korea expected to fall in 2007

 

 

Australian beef exports would remain strong in the short term but would likely face formidable challenges from the US and Latin America in the near future, according to an Meat and Livestock Australia(MLA) study.

 

Even as US beef makes its return to Japanese markets, it is thought that the resumption would be more gradual, thus limiting any immediate impact on Australian beef, Peter Weeks, MLA's chief market analyst, said in a half-yearly projections study.

 

Furthermore, South Korea has sustained its ban on US beef with no agreement in sight, he noted.

 

MLA forecast total beef exports would rise 2 percent this calendar year to 925,000 tonnes bonefree and another 4 percent next year to 960,000 tonnes.

 

Australian beef is expected to maintain a higher market share of these two markets than before the US mad cow case in 2003, even after taking into account the resumption of the trade in US beef, he said.

 

However, competition from the US and Latin America could result in a fall in Australian cattle and beef prices starting in 2007, he said.

 

MLA forecast Australian exports to Japan would fall 2 percent this year to 395,000 tonnes, and by a further 4 percent to 380,000 tonnes next year. Exports to South Korea would fall 3 percent to 103,000 tonnes this year and tumble 27 percent to 75,000 tonnes next year, it said.

 

Also, if Argentina and Brazil gain open access to the US market, Australian prices to that market would likely be slashed 50 percent, the report said.

 

Competition from South America would definitely intensify in future as higher cattle prices and profits accelerate growth in their respective countries. 

 

Argentina's expected re-entry into the US and Canada by 2008, especially, would hurt Australian beef prices to the US, the report said.

 

Still, the report expects restrictions on Brazil would remain in place for the next 5 years and thus protect Australian beef from competition.

 

Australian exports to the US is forecast to rise 3 percent this year to 330,000 tonnes and a further 14 percent next year to 375,000 tonnes, MLA said.