August 7, 2007

Australia's 2007 beef exports forecast up by 3.3 percent

Beef exports from Australian, the world's second-largest shipper of the meat, may be 3.3 percent higher than predicted because of the slower-than-expected re- entry of US supply into Asian markets, an industry group said.

Australia may ship 940,000 tonnes of beef overseas this year, up from a February forecast of 910,000 tonnes or 1.5 percent lower than last year's record, according to Meat & Livestock Australia (MLA).

The Sydney-based trade group wrote in the report said exports in the first half of the year were 4.5 percent higher.

Australian beef sales to Japan and Korea rose to a record in 2006 as the nation benefited from US meat ban over mad cow disease. Though embargoes were lifted, the re-entry of US beef is still sluggish due to strict import controls.

Benchmark cattle prices in Australia fell 1 percent to A$3.3925 (US$2.90) in the week ending Aug. 3 on the Eastern Young Cattle Market Indicator, their second weekly drop. Prices slide as a higher currency and lower quality cattle damped demand.

The slower-than-expected re-entry of US beef into Japan and Korea hasn't stopped prices from falling, the report said. Gains in the Australian dollar, increased supply and "sluggish" demand for beef in Korea and the US have weighed on prices, MLA said.

On the other hand, prices are seen to remain at or below last year's level in the fourth quarter and decline further in 2008, the report said. Australia's dependence on four markets, Japan, Korea, the US and its domestic market, makes prices more vulnerable, it said. More than 90 percent of Australia's beef production is consumed in those markets.

Exports are expected to decline "significantly" in 2008, and then expand from 2009 to reach 1.03 million tonnes by 2011, the trade group said.

Brazil is the world's largest beef exporter.