July 28, 2015

 

Australia's beef exports benefiting from falling AUD and strong demands
 

 

The recent fall of the Australian dollar is expanding commercial opportunities for the country's beef cattle industry. As the currency sunk to its lowest value in six years, producers are eyeing sustainable profits buoyed by a combination of healthy demands in America and Asia, and costlier prices for livestock.

 

The trend will also place Australia's beef production on a more potent competitive edge with the US.  

 

On the contrary, a stronger Australian dollar had, for years, been restrictive on exports and profits. With every 1% rise in the currency against the US dollar, producers in Australia are paying $190 million, Charles Burke, the chief executive of Queensland-based AgForce, told the Financial Review.

 

"Now, in the reverse, every time the dollar depreciates, it does have a tangible impact; it's certainly helping," Burke commented, adding that Queensland's beef sector is witnessing an increase in demands.

 

In addition, lofty volumes of cattle slaughters will boost Aussie beef exports in reaching record levels in 2015. Deliveries could overtake the 1.32 million tonnes volume seen last year, Meat & Livestock Australia (MLA) reported.

 

Beef exports from Down Under had pushed ahead by 11% year-on-year in January – June 2015, to a volume of 646,685 tonnes. However, deliveries could slow down slightly in the second half of the year, albeit concluding 2% higher than 2014's volume eventually, MLA added.

 

With the present exchange rate between the Australian and US dollars as well as hefty price tags for cattle and beef in the States, Aussie beef deliveries to the US, its biggest export market, rose 48% year-on-year.

 

Meanwhile, for the third straight year, more than nine million head of cattle will be processed at Australian meat plants, imposing a potential squeeze on supplies, particularly in 2017. In that year, adult cattle slaughter could drop below seven million head for the first time since 1996.

 

Prior to 2017, the country's cattle herd is expected to decline to 26.1 million head in 2016. The fall represents a decrease of 11%, or 3.2 million head, resulting in cattle numbers at the lowest since 1995.