August 18, 2008

The coming 12 months could be challenging for the Australian cattle industry due to the extension of the long drought into a seventh winter and the competition from cropping.

The high Australian dollar, US beef's return to North Asian markets, ongoing drought and rapidly rising farm costs are now expected to keep the Australian cattle herd and beef supply steady over the short term, according to Meat and Livestock Australia.

Australian beef and veal production is forecast to increase 1 percent in 2008, due to the ongoing drought-related kills, and fall 3 percent in 2009, to 2.14 million tonnes, with lower grain-fed beef and cow beef output offset by increased grass-fed steer and heifer beef.

Generally, Australia's beef exports are forecast to rise just 1 percent in 2008, to 950,000 tonnes (shipped weight), before falling 5 percent in 2009 (to 900,000 tonnes).

After a decade of impressive growth in demand for beef, Australia's domestic market is likely to stabilise in 2008 and 2009, with an anticipated fall in its retail price relative to other meats and growth in the fast food sector offsetting falls in other foodservice segments.

The medium and long term global beef market prospects have improved significantly over the past two years, due to the impact of higher grain costs on all meat prices (partly due to ethanol production) and growing demand in Russia, Asia and Europe.