December 18, 2008

Australia's grainfed beef exports shrinking on weak demand

Poor demand, high grain and oil prices, world credit crisis and a strong Australian dollar have all played a role in pressuring Australia's grainfed beef exports.


Australia was not competitive with the rest of the world in shipping grainfed beef to Japan and South Korea, according to Jim Cudmore, President of the Australian Lot Feeders Association.


Although Australia had that market to itself, but its grainfed beef was too expensive, said Cudmore.


Total Australian beef exports to Japan in November fell 26 percent on-year to 26,893 boneless tonnes, while grainfed exports to Japan during the month fell 24 percent on-year to 11,304 tonnes.


From January to November, grainfed beef exports to Japan declined 15 percent on-year to 136,155 tonnes.


Cudmore said the recent tumbling feed grain prices and weakening Australian currency had increased the competitiveness of Australian grainfed beef. The production cost of the meat now cost 8- to 10-percent lesser than before.


However, there is a long lag between the drop in production costs and a sustained grainfed beef demand abroad, partly due to credit availability issues, said Cudmore.


Shipments to Russia in earlier months were diverted to North Asia as importers failed to secure credit.


Poor export results lead to an abundance of supply, while many overseas buyers bought Australian beef at high prices, said Cudmore, adding that the effects of the weak Australian dollar will not be felt until next year.


Therefore, Australia's grainfed beef exports will increase only some time next year when stocks are depleted in key export markets such as Japan, said Cudmore. 


Australia is the second largest beef exporter in the world. Its key markets include Japan, the US, South Korea and Russia.

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