Cogs to start turning on global beef market

by Editor
Tuesday, August 11, 2009

The Australian beef industry is likely to have weathered the worst of the turbulent trading conditions arising from the global economic and financial crises, with early signals that beef demand is staging a comeback according to Meat & Livestock Australia’s (MLA) 2009 Cattle Industry Projections – Mid Year Update.

However some factors could hinder the speed of recovery: the direction of the Australian dollar, whether the southern drought recedes and the timing of a turnaround in global economies.

Domestic and global beef demand was more severely impacted by the global economic and credit crises over the first half of 2009 than was previously anticipated. However, there is now growing consensus that global economies will stage a recovery from later this year, arresting the slide in consumer demand for beef.

In launching the cattle projections, MLA economist Tim McRae highlighted that some of the necessary pre-conditions required to re-ignite demand are starting to surface.

World economic bodies were forecasting improved economic conditions for later this year, beef stocks in key markets are dwindling, lower import prices are starting to be passed through to consumers in Japan, and the Korean market is recovering from the period of instability created by the return of US product, it says in the report.

Beef and veal production in 2009 is predicted to fall 2.5% on 2008, in contrast to the small rise forecast in MLA’s projections in January – a result of lower than expected feedlot output; lower offer prices; lighter average carcase weights; and improved seasonal conditions – in the north and more recently in the south – encouraging producers to rebuild herds.

Reduced cattle availability in 2009 will also take its toll on the live export trade, with exports forecast to fall 3% despite strong demand, particularly in Indonesia and the Middle East. However, as cattle supplies are restored, exports are expected to rise to 925,000 head by 2013, up 8% on 2008.