Export competition behind cattle price slide

James Nason, 24/06/2011

Competition from US beef in traditional export markets remains a key factor behind recent price falls in Australian cattle markets, according to northern agents.

From a record peak of 424.25c/kg on March 28, the benchmark index for Australian young cattle prices has dropped 12 percent in three months to stand at 372.75c/kg yesterday.

Speculation has surrounded the impact of the suspension of live cattle exports to Indonesia on Australian cattle prices, but Elders northern livestock manager Tony Gooden said that apart from fuelling negative sentiment, it had caused "no physical impacts on the market whatsover".

“Virtually none of those cattle have been sold," Mr Gooden said.

“A few are being absorbed by the big pastoral houses into the channel country, but we’re talking lighter feeder cattle, store cattle that aren’t suitable for slaughter and wouldn’t be for 12 months, no matter where they went, whether they went to a lot feeder or onto grass.

“Even if they do sell they will go to restockers so they won’t hit the market for some time.

“The live export fallout has had no effect, people are just sitting on their hands at the moment because everyone is optimistic the market will re-open in the near to medium term.”

With hundreds of metropolitan media articles on the live export issue being generated each week across Australia, major export processors have reported that some international customers making contact have misunderstood the situation, believing that large numbers of live export cattle were now heading for southern meatworks, which would flood the market and potentially lower Australian export meat prices.

At the monthly weaner sale at Blackall in central western Queensland yesterday – a centre that would be one of the first to feel any impact of live-export cattle flowing east and south due to its proximity to northern stations – the market for 5300 head was strong and rates were slightly better than the previous month's sale, according to Jack Burgess from Grant Daniel Long, Blackall.

Mr Gooden said large numbers of slaughter-weight cattle such as cows and bulls from the north were again being trucked to eastern seaboard and southern processors this winter, just as they were last year following the imposition of the 350kg weight limit on cattle into Indonesia. 

Most were commanding better rates this year than the same period of 2010, he said.

The main reason for the continued falls in the EYCI were subdued economic conditions in Japan following the devastating earthquake and tsunami in that country, and the large volumes of high quality beef that the US was selling into to Korea at competitive rates due to the weaker US dollar.

Meat and Livestock Australia reported yesterday that Korean beef imports for the first five months of 2011 increased 20pc year-on-year, with imports of US beef rising by 46pc and imports of Australian beef rising by 13pc.

Fuelling the sharp spike in demand from Korea was the shortfall created by its forced culling of more than 150,000 domestic cattle earlier this year as a result of a foot and mouth disease outbreak in late 2010.

Despite the increase in the volume of US exports, Australia remains the dominant supplier of beef to Korea, accounting for 78pc of all chilled beef and 44pc of all frozen beef imports to the market.

Mr Gooden said that despite the negative sentiment surrounding the market, there were still bright spots for producers. 

“They are still selling light cattle at good rates, young restocker cattle, and there is still reasonable demand for females.

“People have the luxury of having feed and choices of when they can sell, and we are definitely seeing that."


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