Australia in export box seat

Countryman

Global cattle numbers are declining and Australian producers are set to benefit.

According to 2011 forecast data released by the US Department of Agriculture (USDA), the US and China are struggling to put more beef on the market.

Chinese production will fall by 2 per cent to 5.45 million tons cwt in 2011, while US beef exports will drop back to 2.27 billion pounds from 2.3 billion pounds in 2010.

Chinese authorities point to poor returns from raising beef cattle compared to swine or poultry, while US herds continue to be affected by heavy cow slaughter and high placements of heifers into feedlots.

Meat and Livestock Australia analyst Tim McRae said the US herd decline was positive news for local producers because America was a major competitor.

Mr McRae said falling US beef production would increase demand for imported beef into the country, but a strong Australian dollar compared to the greenback was eroding our export competitiveness.

“In terms of export markets, lower US beef production will have some impact on the amount of beef available to compete with Australian product, although this is somewhat tempered by the US traditionally shipping beef cuts that are in low demand in the US such as short ribs to Korea, ” he said.

“The US traditionally exports 5–10 per cent of its total beef production and roughly produces six times more beef than Australia annually.”

Mr McRae said Australian exporters were in a position to supply increasing demand for beef in the medium to long-term.

But with excellent seasonal conditions in the eastern states, producers are expected to keep rebuilding herds in 2011, which will limit slaughter and beef production.

Mr McRae said the recent and significant movements of WA cattle to the east because of drought was unlikely to affect WA beef exports.

“As is the case of recent drought years in the eastern states, drought periods correspond to higher turn-off and slaughter rates, which correspond to higher exports, ” he said.

“It will be when seasonal conditions improve that the supply of beef in WA will tighten, which may limit export volumes, as has been experienced in the eastern states in 2010.”

Mr McRae said when comparing WA beef export figures with total Australian beef exports, WA had similar percentage production volumes.

He said this was the case for all markets, except to the US where WA had a much lower share.

“In 2011, MLA continues to see growth opportunities for Australian beef throughout Asia, including Indonesia and China.”

“The Middle East has been a market which has shown increased potential in 2010 and this is forecast to continue in 2011.

“Russia is likely to be another market which could record growth if not consolidate its higher exports recorded in 2010.

“Given the very low exports in 2010, exports to the US could increase in 2011, but they would still be very low historically.”

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