October 28, 2008

                 

Australian cattle prices drop due to weak export and seasonal changes
                   

 

National average prices fell across all livestock categories as a seasonal flush in southern supply coincided with weaker export purchase.

 

The rise in cattle, lambs and sheep yarded and consequent falls in prices were particularly prominent in Victoria and southern NSW, reflecting the deterioration in seasonal conditions. This has heightened the normal southern flush of young cattle and lambs at this time.

 

In a perverse reaction to the sharp fall in the A$ in recent weeks and months, many overseas buyers have stepped out of the market or lowered activity, to allow product (bought under a much higher A$) to clear and/or to renegotiate contract terms. Some are having difficulty obtaining credit to fund trades or are concerned over the potential impact of the global financial crisis on demand.

 

These factors are likely to continue to influence the market over the coming month or two, but eventually the trade disruptions should recede, allowing meat export sales and prices and hence livestock prices to respond positively to the lower A$. Any continuing negative price impact of the global economic slowdown is likely to be small relative to the upward pressure from a low exchange rate (if maintained).

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