AAC 2.17% $1.13 australian agricultural company limited.

beef prices tipped to lift 10pc

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    Beef prices tipped to lift 10pc
    By Catherine Miller
    Thursday, 12 July 2007

    Average farm cash income for specialist beef producers in southern Australia in 2006-07 fell by an estimated one third, according to the latest ABARE quarterly report.

    But the good news for beef producers is the forecast for 2007-08, that cattle prices are set to increase by 10pc, to average 323c/kg carcase weight.

    The stronger price will be driven by tight domestic supplies and continued strong export demand, ABARE says.

    As producers rebuild herds after the drought, cattle slaughter will decline by 8pc in the year ahead, despite the hunger for Australian beef in north Asian and North American markets.

    So this will be felt in lower Australian beef exports – down 9pc on last year's to 890,000 tonnes.

    Elders South Australia-Northern Territory livestock manager, Tom Penna, however, sees prices remaining at about present levels, with the pressure to lift prices arising from short supply offset by the downwards pressure on export prices from the high $A.

    The $A is affecting both processors and feedlot returns, and is impacting on cattle market prices.

    While demand is strong for cows, calves and mated heifers during the herd-rebuilding phase, he says the large outlays spent on fodder during the drought have also limited the budget of restockers.

    Despite tight supplies in the coming months, he expects the best quality mated heifers to be about $1,000 and $1,400.

    On the export front, Mr Penna says, despite competition from United States' re-entry into the high-value, north Asian markets and negotiation of a free trade agreement with Korea, he is confident Australia's beef industry can retain much of its market share.

    "Our marketers and processors have been sophisticated in their marketing and have been able to lock away niche markets," he said.

    "As long as we supply a quality assured product, keep it clean and green and keep the quality up to the processors, we will hold our share."

    SOURCE: Rural Commodities feature, Stock Journal, SA, July 12
 
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