* Beef producers in eastern Australia benefit from wetter
* Local prices hit nine-week high
* Australia faces competition in Japan after restrictions on
U.S. beef imports relaxed
* Australian industry hopes Indonesia to open doors to
By Colin Packham
SYDNEY, Feb 6 Australia's struggling beef
industry has received a boost from recent rains in the east of
the country, which will increase grass growth to fatten up herds
in the world's third-biggest beef exporter, producers said.
The wetter conditions in the aftermath of Cyclone Oswald
mean farmers will keep cattle in herds for longer to add weight,
taking some Australian supply out of the market over the next
few months before an increase later this year.
Global beef prices have hit record highs this year as U.S.
cattle numbers fell for a sixth straight year in 2012 due to
high feed costs after the worst drought in half a decade. (LIV/)
"I think through March, April and May, we will see a
tightening of (Australian) supply," said David Farley, chief
executive of Australian Agricultural Company, the
country's largest beef producer.
This has already shown up in local prices with the Eastern
Young Cattle Indicator, a benchmark collected by Australian Meat
and Livestock Authority, rising to A$3.335 ($3.46) a kg last
week, the highest since Nov. 26, before edging back slightly.
The Australian Department of Agriculture, Fisheries and
Forestry (DAFF) forecast in December beef and veal exports would
rise 2 percent in the 2012/13 marketing season.
Australia faces competition, however, from India, which is
expected to expand beef exports by 29 percent this year,
according to the U.S. Department of Agriculture, and in Japan,
where Australia is the biggest supplier.
Japan agreed last month to allow U.S., Canadian and French
beef imports from cattle up to 30 months old beginning on Feb.
1, relaxing a safeguard against mad cow disease that has
frustrated North American producers for a decade.
Australia is the biggest supplier of beef to Japan and
expects exports will fall 4.9 percent this year, though some
doubt the ability of U.S. cattle farmers to meet Japanese
"Any U.S. imports into Japan will only boost Australian
exports into America," said Greg Campbell, chief executive of
S.Kidman and Co Ltd, one of Australia's largest beef producers.
A strong Australian dollar could, however, price exports out
of markets such as Japan, where the dollar is trading at a more
than five-year high against the yen, Campbell said.
In contrast to the situation in the east, a delay in
seasonal rains has stunted grass growth in the Northern
Territory, home to 30 percent of Australia's cattle.
The territory accounts for 80 percent of live cattle
exports and was hit badly by a cut in Indonesian demand due to a
self sufficiency drive. Indonesia plans to cut import quotas in
2013 by 30 percent for cattle and 6 percent for beef, even as
consumption is seen rising 13 percent..
Live cattle exports from Australia are forecast to fall 22.3
percent to 450,000 in 2012/13, the government has forecast, with
the Northern Territory expected to bear the brunt.
A revival in Indonesian imports was possible if the
self-sufficiency drive fails to hit government targets, Farley
"The self-sufficient policies that have been put in place a
number of years ago were a gallant attempt, but it seems to have
failed," Farley said. "The unintended consequences are that
prices have gone up."
The Australian Agricultural Company reported on Jan 31 a
full-year loss after tax of A$8.4 million ($8.75 million), but
said it had boosted its breeding herd to 330,000 head and would
maximise calf output to sell into rising global beef prices.