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Beefs bright outlook
THE worst of the impact from the global economic crisis may be behind the Australian beef industry, judging by signals emerging from Meat and Livestock Australia’s half-year Projections Update released this week.
Trading conditions arising from the world’s fiscal meltdown have made forecasting a hazardous trade to be in, however early signs that beef demand is staging a comeback are starting to emerge.
MLA economist Tim McRae, who delivered Monday’s halfyear summary, warned however that the performance of the A$, the pace of recovery from drought in southern Australia and the timing of a turnaround in global economies could all hinder the pace of recovery.
Among the significant changes listed since the previous MLA projections forecast was issued in January were:
Total beef production for 2009 is predicted to fall 2.5pc on 2008, in contrast to the small rise forecast in January. That’s a result of improved seasonal conditions in northern Australia and more recently in the south, encouraging producers to rebuild herds. There is now a record proportion of females 12 months or older within the national herd - now 50pc. The full impact of herd rebuilding on turnoff, season permitting, is not expected until at least 2011, with beef production in 2010 rebounding from this year’s lower level.
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A contraction in beef exports for 2009, back 4pc to 950,000t shipped weight, before hitting one million tonnes in 2010.
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Cattle slaughter revised back 3pc, or 250,000 head, as producers retain cattle.
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Average carcase weights back 3pc, to 270kg, due primarily to slower than expected recover in grainfeeding activity.
Longer-term, the Australian beef herd should continue to expand towards 30m head in 2013, reaching 28.4m by June next year.
The global beef demand/supply balance is expected to tighten, potentially lifting prices.
Before greater demand can resurface, however, Mr McRae said there were some necessary pre-conditions.
“World economic bodies are 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,” he said.
MLA predicts that export demand will start to rally in the second half of 2009, further aided by a seasonal increase in demand from Japan and Korea.
Japan exports should grow by 3pc in 2010, benefited by a lower A$.
Korean exports this year and next are predicted to decline further, however, under the weight of increasing US competition.
However, not all the stars are yet aligned for a complete recovery this year.
Exporters are still grappling with tight livestock supplies, the higher A$, weak byproduct prices and low import prices.
The volatility in cattle prices witnessed last year – which saw prices peak in October and then fall by as much as 18pc over the remaining months – is unlikely to be repeated this year, Mr McRae said.
This year’s price peak is expected to be more restrained than last year’s, but higher than they were in 2008.