November 11, 2010

 

 

The high Australian dollar has hit beef sales with US purchases in October falling to a 14-year low of less than 9,000 tonnes.

 

It meant that, for the first time in memory, the US was displaced from the top two export rankings for Australian beef, with the country shuffled down to fourth place behind Japan, Russia and Korea.

 

A below-average cattle kill for spring has cushioned the market against the bleak results that have been recorded on the export scene.

 

However, despite the US being the traditional cornerstone of the grinding beef industry, saleyard prices for cows have hung on and are tracking 23% higher than the same time last year at a national average of US$1.41 a kilogramme liveweight.

 

The good season and tighter kill numbers as producers rebuild herds has protected the export cattle market from what, on paper, would have been a price savaging as the dollar hit parity with the Greenback and consumer spending in many countries remained sluggish amid ongoing fallout from the global financial crisis.

 

As the graph on this page shows, the October cattle kill in the eastern states is tracking below the five-year average, even though numbers in the major beef state of Queensland have started to increase as animals held back due to the floods earlier in the season start to enter meatworks.

 

The National Livestock Reporting Service said the cattle kill last month was 5% below the five-year average for mid-spring, with lower numbers in the states of NSW, Victoria and Tasmania the main contributors.

 

Victorian exporter Peter Greenham, of HW Greenham & Sons, which operates abattoirs at Tongala and in Tasmania, said the US was no longer the dominant buyer when it came to grinding beef, as reflected in the latest export rankings.

 

Last month Greenham's changed the type of grinding beef being produced at its Tongala plant to 85 chemical lean (meaning 85% red meat and 15% fat), shifting away from the traditional 90% chemical lean that is favoured by the US. The new, fattier product is destined for Japan.

 

Mr Greenham said apart from market demand and price, the change had been prompted by the fact kill cattle this season are carrying a lot more condition and fat cover due to excess grass.

 

Japan was the biggest buyer of Australian beef in October at 27,310 tonnes, although this was still 12% lower than a year ago. This was followed by Russia, which took 9,995 tonnes and Korea at 9,679 tonnes.

 

Exports to the US totalled just 8,951 tonnes, which was 45% below October last year and the lowest monthly total since January 1996.

 

"All the information coming out of the US suggests there will be a shortage of meat and prices should rise, although when this will happen is unclear but it is likely to be after the New Year,'' he said.