December 15, 2003

 

 

Australia's Beef Output, Exports To Fall In 2003-04

 

Beef production in Australia will fall a little this fiscal year, reflecting the ongoing impact of a drought, constraining exports, the government's Australian Bureau of Agricultural and Resource Economics forecast Monday.

 

Abare, in its quarterly Australian Commodities outlook publication, estimated beef output this fiscal year at 1.89 million metric tons, down from 2.07 million tons last fiscal year ended June 30, 2003.

 

Cattle slaughterings are forecast to fall 11% this fiscal year to 8.23 million beasts from 9.23 million last fiscal year, as producers withhold stocks to begin rebuilding herds after the drought.

 

Continuing poor seasonal conditions in some areas, particularly in Queensland, have meant that not all producers have been able to start herd rebuilding, it said.

 

"The fall in sluahgterings from the drought-induced highs of 2002-03 means that production for the year (2003-04) will be lower," it said.

 

Australia is a major global supplier of beef, particularly to the U.S., Japan and other markets in Asia, with shipments to buyers overseas tied closely to local production levels.

 

The Australian cattle herd is forecast to contract to 26.4 million beasts this fiscal year from 26.5 million last fiscal year and 27.9 million in fiscal 2001-02, it said.

 

Abare said a reduction in turnoff of animals from farms and an increase in restocker demand underpins a forecast increase in average saleyard prices this fiscal year.

 

Saleyard cattle prices are forecast to jump this fiscal year to average A$2.87 a kilogram dressed weight from A$2.56 last fiscal year, both still down from A$3.06 in 2001-02, it said.

 

With production to fall, Abare forecast beef exports this fiscal year will slide 11% to 803,000 metric tons shipped weight valued at A$3.75 billion from exports last fiscal year of 969,000 tons valued at A$3.76 billion.

 

About two-thirds of local beef production is exported, with the seeming difference in the proportions of production and exports accounted for by the lack of bones in export meat.

 

Of the major exports markets, demand from the U.S. has been strong this fiscal year, but lower Australian output means exports to this market are projected to fall to 334,000 tons from 350,000 tons last fiscal year and an actual 403,000 tons in 2001-02.

 

While prices in the U.S. for imported Australian beef have risen strongly in recent months, a sharp appreciation in the Australian currency against the U.S. dollar has limited gains for Australian exporters, it said.

 

In Japan, demand for Australian beef continues to recover after plunging in the wake of the discovery of several cases of mad cow disease in the Japanese dairy herd late in 2001, it said.

 

But exports to this market will be limited by the downturn in Australian production and strong U.S. demand, it said.

 

Japan's introduction in August of a snapback tariff increase on fresh and chilled beef imports didn't have a dramatic impact on the Australian beef industry but resulted in short-term volatility in Japanese imports at that time, it said.

 

Exports to Japan are forecast to fall to 265,000 tons this fiscal year from 277,000 tons last fiscal year, both still up from actual exports of 243,000 tons in fiscal 2001-02.

 

Beef exports to Japan peaked in fiscal 2000-01 at 336,000 tons.

 

Exports to South Korea this fiscal year are projected to fall to 64,000 tons from 82,000 tons last fiscal year, it said.