October 17, 2008

Russia, viewed as a high-potential market for Australian beef, has held back its appetite for beef as the world looms into a financial crisis.

Beef shipments to Russia have contracted to 4,456 tonnes in September from a record 17,280 tonnes in May.

Importers have reportedly held back on purchases or tried to renegotiate contracts made under the higher Australian dollar as the currency depreciates and Russian demand hit a slump.

Congestion in Russian port, a saturated market (due to high South American imports in mid-year) and the devaluing rouble against the US dollar since mid-July have also affected the Russian beef trade significantly.

Impact of the current credit crisis has also led to many Russian importers failing to secure credit to meet existing contracts or purchase new product.

It is likely that the large and expensive beef stocks in Russia have to be cleared before importers re-enter the market. This could take until early 2009, as the Russian winter normally disrupts port operations.

Russia is Australia's fourth largest beef export market, importing about 65,861 tonnes of Australian beef in the first nine months of 2008.