September 22, 2006

Australian cattle prices fall as El Nino fears intensifies

Cattle prices in Australia fell to a three-month low amid fears that El Nino conditions may extend a drought and reduce grain and grass available for livestock feed.

Prices have fallen to their lowest since Jun 16, on the benchmark Eastern Young Cattle Indicator and have declined 3 percent this month.

At least 60 percent of Queensland state, the biggest beef producer in Australia, are under drought conditions and the situation is worse in New South Wales, where 92 percent of the land was hit by drought. 

More trepidation was felt in the market as US Climate Prediction Centre announced last week El Nino conditions are developing in the tropical Pacific Ocean and were likely to continue to develop into early 2007.

Cattle prices have fallen 11 percent since Sep 4 when it was announced that Australia has had its driest August since records began in 1900.

Ranchers are now less inclined to take on young cattle as they feel that drought conditions has gone on for too long and would continue, said Jack Gleeson, national manager of livestock operations with Futuris Corp.'s Elders unit.

Prices for cattle for in feedlots have also slipped, although not as much as that for young cattle prices.