September 26, 2008

Australia's largest beef producer, Australian Agricultural Co Ltd (AACo), said the outlook for beef market is strengthening.

Cattle market conditions had continued to improve in the past month, with beef prices remaining high, a softer exchange rate for the Australian dollar, and falling oil prices and interest rates, according to AACo.

Export receipts had benefited from the sharp decline in the Australian-US exchange rate to about 80 US cents, down from 98 US cents in July.

Company chief executive Stephen Toms said beef prices are at 360 cents per kg and the decline will boost Australian dollar receipts for the next one year, particularly on sales to the US.

Beef prices are expected to be sustained by the continued global supply shortage, said Toms, adding that breeding herds in China, Russia and the US are either in decline or flat and evidence shows that the growth in Brazilian beef exports has peaked.

Recent rainfalls across central Queensland had also encouraged grazers to restock to make good use of feed pools, Toms said.

In addition, AACo had purchased a 850-head Wagyu stud herd for about US$832,100. The herd is expected to boost AACo's Wagyu production capacity by 50 percent.