Demand for Aussie beef to rise

ON THE UP: International demand for Australian beef is expected to strengthen in 2014.
ON THE UP: International demand for Australian beef is expected to strengthen in 2014.

AUSTRALIA'S beef industry faces brighter prospects in 2014, with strong international demand, combined with tight local supply, according to a new report released by agribusiness banking specialist, Rabobank.

The report, Beef in 2014: Demand bright, local supply tight, said the decline in beef production, particularly in lean beef in the United States, which is Australia's second largest beef export market - meant Australian product would be in demand.

However, the Rabobank report cautioned, in other less traditional markets - where cost is the primary determinant - growing competition from India should be expected, with increased local Indian supply available for export.

Additionally though, more optimistic signals were forecast in the live cattle trade, the report said, with increased demand from Indonesia welcomed, assuming supply could be sourced.

Report co-author, Rabobank animal proteins analyst Matt Costello said after a very difficult two years, Australia's beef sector would be hoping for increased returns in 2014, as supply tightened domestically and global beef demand remained strong.

"Looking ahead to 2014, the ongoing drought conditions in Australia are likely to further hinder any growth in livestock numbers," Mr Costello said.

Between January and September, total Australian cattle slaughter has been sustained throughout 2013, increasing 14%, or 842,000 head year-on-year, to 6.8 million head, with the majority of the additional processing volumes attributed to cow and heifer slaughter.

Mr Costello said since January 2010, significant herd rebuilding had taken place, but the seasonal pressures of 2013 had forced producers to offload breeding stock, with total herd expectations around 28 million head.

Competitor watch in 2014

EXPORTERS will see increased interest from the US, while increasing competition from India will likely limit growth in exports to a number of South East Asian and Middle Eastern markets.

Mr Costello said although beef supplies from Australia were expected to tighten in 2014, total beef production globally was forecast to remain relatively steady compared to 2013.

US hungry for beef

THE US will experience a significant decline in beef production in 2014, the Rabobank report said.

"The urgency to rebuild the US herd is becoming ever more pressing due to the ongoing liquidation occurring over the past three or so years," Mr Costello said.

"If weather permits, US producers will need to grow cattle numbers, which are now at 60-year lows. With tight US supply forecast for 2014, this will help drive strong demand for Australian product."

Indian buffalo meat exports to remain strong

INCREASING exports of Indian buffalo meat in 2014 would target South East Asian markets, according to the Rabobank report.

"After becoming the world's second-largest bovine exporter in 2012, the growth in the Indian buffalo meat shipments continued throughout 2013, increasing 4%, or 22,000 tonnes swt, in the first six months of 2013.

"Of particular importance is India's continued push of buffalo exports into markets such as Vietnam and Thailand, presumably through grey channel for re-export to China."

Asian market dynamics

DESPITE competition from the US for Australian product, exports to China are forecast to remain strong in 2014, as China will continue to face a supply deficit, creating strong demand for imports.

Rabobank expected Brazil to regain formal access to the Chinese market in early 2014, which would give China the opportunity to diversify its supply base.

Australia accounts for 48% of China's formal imports.

Mr Costello said the signing of the Free Trade Agreement between Australia and South Korea was welcome news for Australian beef producers.

"Without the agreement, Australia was becoming less competitive relative to the US, Australia's largest competitor into the Korean market," he said.

Topics:  cattle livestock