November 22, 2013

Australia's beef output is expected to reach a new high this year.

"But that record level is cold comfort for producers who are currently struggling with much lower cattle prices," Meat and Livestock Australia (MLA) trade and economic services general manager Peter Barnard said.

Barnard told an MLA producer forum in Wodonga last week that Australia was expected to produce 2.3 million tonnes of beef this year, up from 2.15 million tonnes last year.

He said that this is more than in the 1970s when slaughter rates were so much higher than they are now.

The trend has been attributed to heavier carcasses and "a huge increase in (cattle) turn-off in eastern Australia" due to deteriorating seasonal conditions.

An extra 700,000 cattle have been slaughtered so far this year compared to last year because of the tight season, particularly in Queensland and New South Wales (NSW).

Despite the benchmark Eastern Young Cattle Indicator falling about AUD0.90 (US$0.83) per kilogramme carcass weight - or 25% - since its 2011 peak there was "a great deal of hope" for the local beef industry with worldwide demand very strong.

Forecasters have prices for Australian 90CL manufacturing beef to the US rising 5-10% next year. Added to the positive outlook was the strong Australian dollar "which has had such an impact (and) is showing signs of weakening," with forecasts of it declining US$0.05-0.10 per kilogramme next year.

Barnard said if the Australian dollar was at 2008-09 levels, the EYCI "rather than AUD3 (US$2.76) per kilogramme now would be AUD3.50 (US$3.22) per kilogramme."