February 22, 2010

Australia beef scores relatively well in key markets

Market conditions in the US, Japan and South Korea proved to be rather favourable to Australian beef, and prices in the markets range from stable to higher.

Disruptive weather and tight cow supplies in the US combined to push prices higher this week for both fresh domestic and imported beef.

CIF prices for Australian 90CL averaged 154.5US¢/lb CIF, up 5US¢/lb on last week, while FAS prices in Australian dollar terms gained 9.1A¢/kg over the past week to 350.4¢/kg FAS.

The week began in a bullish mood but US buyer activity tapered off towards the end of the week.

Tight supplies in both Australia and the US remain a key driver of the imported beef market dynamics, with US cow slaughter declining sharply from its peak in mid-January due to heavy snow falls.

Australian beef  exports to Japan declined 18% year-on-year in January, but wholesale prices have started to move upward this month, particularly chilled items. Chilled grassfed fullest prices averaged JPY790 (US$8.62) per kg this week, up 6% from a month ago, or 17% higher year-on-year. The Japanese trade is aware of the strong Australian dollar and short supply of cattle in Australia, and anticipates the prices to firm further.

In the beef export market, Japanese buyers remained interested in various items this week, but a shortage of product, competition from other markets, and the robust Australian dollar continued to be a challenge. Trimmings have attracted particularly good attention, according to Australian exporters.

Widespread rain throughout Australia's eastern seaboard may further impact Australia's beef supply to the South Korean market, as cattle traffic and processor activities remain subdued.

The Korean wholesale beef market is slowly increasing its trade activity, but overall prices of imported beef are steady. As Lunar Year sales have passed, retail demand for imported beef has increased as stocks are restored. However, limited supply from Australia may benefit other beef suppliers.

Australia exported 4,197 tonnes swt of beef to South Korea from February 1-16 this year, down from 8,306 tonnes swt exported in February last year.