December 19, 2003

Australia Cattle Prices To Rise On Decline in Slaughter Numbers

Australian Bureau of Agricultural and Resource Economics (ABARE) has recently compiled the December quarter commodities forecasts, and has stated the country's cattle slaughter will decline significantly in 2003/04, resulting in lower export volumes and higher saleyard prices.

ABARE forecasts total cattle slaughter (including calves) in 2003/04 will fall 11% on last year, to a seven year low of 8.2 million head, as producers withhold cattle in order to rebuild drought-depleted herds. The associated 9% fall in beef production in 2003/04 is forecast to result in total beef exports for 2003/04 declining 11%, to 803,000 tonnes sw. 

Exports to the United States and Japan, Australia's two largest markets, are forecast to decline 5% and 4% respectively in 2003/04, while strong export beef prices should see the value of total beef exports remain steady with last year, at A$3.7 billion.

Given the forecast tight supply of cattle, average saleyard cattle prices in 2003/04 are expected to rise across all categories, with yearling prices up 10% on last year to an average of 317¢/kg cwt and Japan ox prices predicted to rise 8%, to 307¢/kg cwt.  The desire for producers to rebuild cattle herds will see cow prices jump 15% in 2003/04, to 260¢/kg cwt, with both restocker an export demand remaining strong.

Australian live cattle exports for 2003/04 are forecast to decline 16% on the previous year, to 810,000 head due to lower cattle supplies. In addition, high domestic cattle prices and the strong A$ is expected to reduce demand for Australian cattle.