June 13, 2011

 

Australian livestock sector to be affected by export ban

 

 

The effects of the Australian beef and cattle sector from the suspension of live cattle trade to Indonesia will affect the whole industry, across every state.

 

The impact will be felt the hardest across northern Australia, especially for those producers in the NT and WA who have no other outlet for their cattle.

 

However, the suspension of the live cattle trade to Indonesia will neither result in a rush of cattle into Australian processors, nor a surge of beef in coming weeks and months. Cattle placed on ships to Indonesia are typically Brahmans of light weight (less than 350kg lwt). These cattle will require much longer periods on feed to reach suitable slaughter weights for either the Australian, or more particularly, export markets.

 

Indeed, the very good season that has been experienced across much of northern Australia, especially western Queensland, will largely allow the additional cattle to be accommodated and gain weight.

 

Cattle prices seasonally ease throughout May and June, as additional numbers enter the slaughter markets upon the completion of the wet season. In recent weeks, and in coming weeks, the main influence upon export cattle prices will continue to be sluggish demand in Japan and the US, along with the near record high Australian dollar.

 

The EYCI finished Thursday at AUD3.85/kg cwt (US$4.06), AUD0.025 (US$0.026) below last week and 4% above the corresponding period last year.

 

Therefore, the most impact for the entire beef industry will be felt in the medium term if the situation is not resolved quickly, as heavier cattle move through to slaughter in 6-18 months time.

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