February 6, 2004

 

 

Australian Cattle Prices Down As Supply Increase

 

Australian cattle prices fell this week as a result of increased supplies in southeast Australia, marketing concern Meat & Livestock Australia Ltd. reported Friday.

 

The price paid for steers suitable for Japan fell the most, and even strong demand from feedlotters couldn't stop price falls for trade cattle, it said in a weekly market review.

 

Demand from feedlotters, particularly for yearling steers and medium weight steers, is reported keen as this sector gears up to meet increased demand from Japan.

 

Japan is sourcing more beef from Australia after banning the import of beef from the U.S. after the discovery there late in 2003 of a case of bovine spongiform encephalopathy.

 

Around two-thirds of Australian beef production is exported, making it a major world beef exporter and making export demand an important driver of prices in domestic saleyards.

 

In the U.S. this week, MLA said prices for Australian manufacturing beef edged higher this week due to limited offerings.

 

"Steady January rainfall in northern Australia and strong demand from Asia contributed to the limited supplies" on offer, it said. Australian producers generally keep cattle on their properties after rain to take advantage of rejuvenated pastures.

 

Tight supplies in the U.S. more than offset a fall in demand, with unusually cold weather in the northeast impacting negatively on fast food demand, it said.

 

Buyers are reluctant to place large forward orders given the uncertainty in the market, it said.

 

In the U.S., Australian frozen 95 chemical lean bull beef closed unchanged at US$1.13 a pound, including carriage, insurance and freight, still up from US$0.96/lb a year ago.

 

Frozen 90CL cow beef added 1 cent to US$1.12/lb, still up from US$0.94 a year ago.

 

The free on board prices in Australia for these products rose 1 cent and 3 cents to A$2.94 a kilogram estimated dressed weight and A$2.90/kg respectively, free alongside.

 

In Australian saleyards, a national price indicator for cows suitable for the U.S. trade fell 3 cents to A$2.56 a kilogram estimated carcass weight, up from A$2.03 a year ago.

 

In Japan, export prices slumped this week, with importers resisting the high offer prices from Australia, amid uncertainty about when the market will reopen to U.S. products, the MLA said.

 

Prices for Australian beef in Japan rocketed 50% soon after the U.S. BSE announcement and have softened since, but still haven't returned to levels before the U.S. news.

 

Prices in Japan for Australian chilled grassfed fullsets plunged 37 cents this week to US$2.03/pound, including carriage and freight, still more than a third higher than the year-ago level of US$1.54.5/lb.

 

The estimated free on board price for this product in Australia was quoted at A$5.46 free alongside, down A$1.09 from last week, and just a little higher from A$5.32 a year ago, it said.

 

In Australia, a national price indicator for the type of beast suitable for Japan closed the week 16 cents lower at A$3.21/kg, still up from A$2.80/kg a year ago.

 

The MLA said on first appearances, the South Korean market appears strong, given that prices are 12% to 32% higher than pre-U.S. BSE levels.

 

However, these price rises don't represent the true state of the market, it said.

 

Consumption has fallen between 70% and 90% in retail outlets, while food service demand has also fallen dramatically, with volumes traded way down on normal, it said.

 

So what appears to be high prices merely reflects the prices paid for small volumes currently traded, it said.

 

A national price indicator for the type of beast suitable for the South Korean trade lost 11 cents to close the week at A$3.19/kg, up from A$2.61/kg a year go.

 

A national price indicator for domestic trade steers lost 12 cents to settle at A$3.35/kg, up from the year-ago level of A$2.69/kg.