4 August 2010

3 minute read

Oceania

Launching Meat & Livestock Australia's (MLA's) 2010 Cattle Industry Projections mid-year update on 2nd August, MLA Economist Tim McRae said the slow herd rebuilding should gain some momentum through 2010-11, on the back of increasing confidence in the season - with a 1.5 per cent growth predicted over the year, to 28.4 million head (from 0.3 per cent growth the preceding year).

"With the majority of the cattle growing regions experiencing their best season in five years, many producers will be looking to re-build their herds. The influence of the better season on the market has been evident throughout 2010, with the EYCI currently five per cent higher year-on-year, and 30 per cent above the low point in early December 2009".

"Recovering economic conditions in Japan and the US, coupled with low global beef stocks, should see an increase in buyer demand into 2011."

Mr McRae said increased demand in the domestic market and in the global manufacturing beef trade has softened the impact of a mostly flat export market.

"An additional 25,000 tonnes of beef is forecast to be sold through the domestic market in 2010 and retail prices are expected to be maintained, leading to a 4% increase in domestic expenditure to $6.8 billion.

Export demand is still down from 2009, principally due to the A$ rise, with exports projected to reach 900,000 tonnes swt for 2010, down three per cent.

"The high Australian dollar has been the primary problem for Australian beef exporters in 2010, combined with the rain-induced decline in production early in the year. A forecast three per cent production rise in 2011, to 2.18 million tonnes swt, underpins the forecast increase in beef shipments (up five per cent, to 945,000 tonnes), which should coincide with some recovery in consumer demand".

"Exports to Australia's largest beef market, Japan, are forecast to decline five per cent in 2010, hindered by tighter production, rising US exports, a higher A$ and sluggish consumer demand. In contrast, volumes to Korea are tipped to maintain 115,000 tonnes swt, despite increased US beef entering the market - due to a strong economy and lower Korean production".

The global manufacturing beef trade remains a highlight amidst the global demand slump, with US import prices (in US$ terms) close to record levels in 2010, Russian demand recovering, easing competition from South America and further expansion in demand in South East Asia, the Chinas and the Middle East. After a slow start, some recovery is expected in beef exports to the US market over the second half of the year, encouraged by rising US cattle and beef prices. Similarly, demand from Russia is expected to remain strong until the onset of their winter, as demand recovers and imports from Argentina remain low - with the export forecast for Russia raised appreciably to 35,000 tonnes swt for 2010, up 130 per cent on 2009.

"In the live export arena, the outlook for the coming five years is particularly uncertain, being highly reliant upon demand from Indonesia. While access to Indonesian import permits is likely to be the main impediment to the trade, it will also take some time for the production systems to adjust to the 350kg limit for cattle to Indonesia".

Looking towards the medium term, cattle production in some of the world's major exporting regions - especially North America and South America - has been falling, which will serve to boost prices if increased demand can be sustained into 2011 and beyond.

TheCattleSite News Desk