June 8, 2005

Australia's fall in grain output will hurt its beef trade

A forecast drought-related decrease in domestic grain output in 2005 could cause grain prices to rise, reducing the competitiveness of lofted Australian beef exports in North Asia. Additionally, the US is expected to resume exports to that region shortly.

Output from winter crops, including wheat and barley for this crop year will likely fall 18 percent to 26.1 million tonnes, while production from the last sorghum crop, the major feed grain produced over summer, will fall 19 percent to 1.7 million tonnes.

Japan and South Korea are expected to lift their ban on US beef later this year after a two-year suspension. The number of cattle in Australian feedlots surged 14 percent to a record 856,025 beasts from the fourth quarter of 2004 to this year's first quarter, reflecting unrelenting demand from Japan.

About half the numbers of cattle on feed in the first quarter were in Queensland State, while about one third were in New South Wales.

Exports of grain fed beef from Australia in the calendar first quarter reached 44,056 tonnes, which went down 10 percent from the last quarter, but 25 percent more than the year-earlier period. Grain-fed beef exports in the first quarter represented 22 percent of total exports, with the balance of beef exports coming from cattle grown to maturity on pasture.

Australia exports about two-thirds of its beef production, making it the second biggest global exporter after Brazil.