January 07, 2004
Australian Cattle Prices Surge in Mad Cow Aftermath
Prices of specific types of cattle in Australia surged following the discovery of mad cow disease in the U.S.
But prices for some other types of cattle haven't changed or have fallen slightly in the face of disruptions in the global beef market caused by the BSE discovery, they said.
"There's certainly been a spike in the export-type Japanese-type animal," Tony Gooden, Queensland state manager for Futuris Corp.'s Elders livestock agency, one of the two major agencies in Australia, told Dow Jones Newswires.
Queensland is the center of the Australian beef industry.
Heavy grainfed bullocks of the type suitable for processing into meat for the Japanese market have risen up to A$0.70 cents a kilogram dressed weight since pre-Christmas to almost A$4.00/kg, in direct sales to processors from producers, Gooden said.
Price rises of this magnitude translate to a considerable lift in returns for cattle producers, he noted.
Prices for animals suitable for the South Korean beef trade likely also have risen, he said, without providing details.
Gooden said prices for these types of beasts could rise even further as many major processors return to work from around mid-January after annual holiday and maintenance shutdowns.
Australian Meat Holdings Pty. Ltd., for instance, Australia's largest beef exporter, will resume processing from Jan. 19, and will be sourcing animals for slaughter ahead of that date, a company spokesman said.
Many countries in Asia and elsewhere, including Japan, South Korea and Taiwan, immediately effectively banned imports of U.S. beef after the BSE discovery.
Australia, a major global supplier, competes with the U.S. to supply these major markets.
Australian exporters have reported an increased level of inquiries from Japanese buyers since the news of the BSE discovery broke.
U.S. cattle markets have plunged, while prices for Australian beef in Japan are reported to have jumped 40% since the announcement.
Gooden said he expects strong demand for Japanese-type heavy weight grainfed bullocks to continue at least in the short term.
But longer-term, demand is more difficult to gauge.
The U.S. will be looking to convince its export markets that the beast that had BSE was sourced from Canada, which has now been confirmed, and that U.S. product is entirely safe and that normal trade should resume, he said.
Gooden said the increased demand has been for specific cattle types.
The prices of domestic trade cattle have opened 2004 "barely firm" and maybe even "slightly easier," he said.
This is because a lot of the trim from the carcasses of these beasts end up in the U.S., where demand for Australian product could soften in the face of an overabundance of local product, he said.