October 25, 2004

Australian Beef Prices May Fall as Japan Eases Ban

Australian cattle prices, which rose to a record last month, may fall as Japan eases a 10-month ban on US beef imports, according to the Cattle Council of Australia, a group funded by beef producers.

Japan, the biggest consumer of Australian beef this year, will allow US beef imports from cattle less than 20 months old within "a matter of weeks'', US Department of Agriculture Undersecretary J.B. Penn said in Tokyo yesterday.

A 27 percent jump in Australian beef exports was seen this year after at least 40 countries banned US beef following the discovery of a case of mad cow disease. Australia, the world's biggest beef exporter by value, accounted for 90 percent of Japanese beef imports in the first six months of this year.

"It will have a negative impact on the Australian market, but to what extent is hard to say,'' said John Wyld, vice president of the Cattle Council. "There's the possibility of a big impact with a battle for market share.''

Prices on Australia's benchmark Eastern Young Cattle Indicator rose to a record A$3.95 a kilogram on Sept. 15 and traded at A$3.74 on Oct. 22, the National Livestock Reporting Service said. Prices have risen 20 percent this year.

Japanese beef imports fell 40 percent in the first six months of this year, according to government forecaster the Australian Bureau of Agricultural and Resource Economics, after US beef imports, valued at $1.7 billion in 2003, were banned in December.

"Australia wasn't able to supply all the beef Japan required so Japan reduced consumption,'' the Cattle Council's Wyld said. "It's hard to say how the Japanese market, which has got used to dealing with less, will react.''

Japanese import prices for beef may fall 7 percent in the year ended June 30, 2005, should import bans on beef be lifted by December, the Australian Bureau said in a September report.

Full beef trade between Japan and the US may resume after a review in July, Penn told reporters in Tokyo after three days of talks between the two countries.