September 18, 2013

After key market Indonesia abandoned a quota system, Australia, the world's third-largest beef exporter, has boosted its projection for live cattle exports by 25%.

Australia had been hit hard by the tightening of quotas in its largest live cattle market in 2012 and 2013 and relies heavily on Indonesian demand. The Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) said in a report on Tuesday that total live exports would stand at 590,000 head of cattle in the 2013-14 season that begins in October, up from the 470,000 touted earlier.

According to ABARES chief economist Paul Morris, only about 300,000 head of cattle is the least he could expect as Indonesia may take more than half of the total live cattle exports.

Indonesia aborted its quota system in July, allowing the unlimited importation of live cattle in an effort to curb domestic beef prices.

Strong growth in Indonesian demand will offer a helping hand to Australian cattle farmers, who have also been hurt by arid weather. The benchmark Eastern Young Cattle Indicator rose on Monday (Sep 16), but remained close to a three-month low as dry weather weighed on prices for young cattle and cows.

In 2012-13, Indonesia took 266,000 head of cattle from Australia, way below 700,000 in 2010-11. Australian live exports totalled 513,000 head of cattle in the 2012-13 season.

ABARES kept its forecast for slaughtered beef exports in the marketing year that starts in October unchanged at a record 1.07 million tonnes, while increasing its outlook for live cattle exports. It raised its Chinese demand estimate to 130,000 tonnes from 120,000 tonnes, but said that was offset by increased competition from US beef in other markets.

Morris also said that recent heavy rains across Australia had eased fears over potential yield losses in the world's no. two wheat exporter.

"The rainfall we have had in the last few days across the southern parts of the eastern states and Western Australia actually puts us in a pretty good position," said Morris.

ABARES last week slashed its wheat production forecast for the 2013-14 season by more than 3% to 24.467 million tonnes, but output is still expected to be its sixth largest on record.