Aussie beef producers brace for a challenging 2010

by Bryan Salvage
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NORTH SYDNEY, AUSTRALIA – Meat & Livestock Australia (M.L.A.) relays Australian cattle producers and beef exporters can expect another year of subdued prices and lackluster export demand – but the low-point in prices should have passed.

While launching M.L.A.’s 2010 Cattle Industry Projections, Tim McRae, M.L.A. economist, said a complete market recovery won’t occur until demand lifts in Japan, South Korea and the U.S. – and the Australian dollar recedes to a more manageable level.

“Although there is likely to be some improvement in beef and cattle prices in the U.S. this year, Japanese demand is likely to remain sluggish,” Mr. McRae said. “Australian beef will also come under increased pressure in Korea from U.S. beef, spurred by a multi-million dollar marketing campaign and low U.S. dollar.”

Australian beef exports in 2010 are expected to fall 5.7% year-on-year to 875,000 tonnes shipped weight (swt), with beef exports to Japan forecast to fall 7%, to 330,000 tonnes in 2010, and 18% to Korea, to 95,000 tonnes (swt).

The high Australian dollar is expected to remain the primary problem for Australian export processors and is likely to be exacerbated by lower numbers of cattle available for slaughter, Mr. McRae said.

M.L.A. forecasts adult cattle slaughtering to fall 4.5% to 7.4 million head in 2010, the lowest since 1996, due to the smaller herd, previous poor breeding seasons and the retention of more females (halting the herd liquidation). With a small lift in weights, beef production is forecast to fall around 4%, to 2.05 million tonnes carcass weight (cwt).

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