July 10, 2008

 

Increased competition dims Australian beef outlook

Australian beef trade is currently confronting issues such as the high Australian dollar, fluctuating export demand, high feed costs and intense competition from US beef traders.

 

The Australian Bureau of Agricultural and Resource Economics' (ABARE) Australian commodities said a reduction in cattle slaughter is expected to increase weighted average saleyard prices by 3 percent in 2008-09, to 294¢/kg cwt.

 

However, US beef competition in South Korea is expected to curtail shipments by 14 percent in 2008-09, to 125,000 tonnes swt.

 

Furthermore, an increase in US beef exports to Japan will further impact Australian volumes, with shipments easing 4 perent, to 350,000 tonnes swt – the lowest level since 2003-04.

 

With the decline in exports to both Japan and Korea, total beef shipments for 2008-09 are forecast to be back 3 percent on 2007-08, at 900,000 tonnes swt.

 

Following a 20-percent decline in beef shipments to the US in 2007-08, volumes to this market are expected to increase marginally in 2008-09, up 1 percent to 245,000 tonnes swt - despite a forecast 5 percent increase in US imported beef prices.

 

Contributing to the lower exports for 2008-09 will be a 1-percent decline in beef and veal production and cattle slaughter, at 2.1 million tonnes cwt and 8.7 million head, respectively.

 

Most of the decline in turnoff for the year is attributed to a tightening in female supplies, as producers look to rebuild herds.

 

ABARE said a renewed emphasis on herd rebuilding should see the Australia herd increase to 28.2 million head in 2008-09 - up 100,000 head on the previous year.

 

The high Australian dollar is expected to see a 3-percent fall in Australian live cattle exports in 2008-09, to 680,000 head.