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Published December 16, 2013, 10:23 AM

Chinese hungry for Australian beef

Australia’s beef exports are set to rise 7 percent in the current 2013 to ’14 season to a record high satisfying the appetite of Asia’s increasingly affluent population and cementing the country’s position as China’s top supplier of beef.

By: Colin Packham, Reuters

SYDNEY — Australia’s beef exports are set to rise 7 percent in the current 2013 to ’14 season to a record high satisfying the appetite of Asia’s increasingly affluent population and cementing the country’s position as China’s top supplier of beef.

But the world’s third-largest beef exporter could see production slow next season with cattle numbers falling to a four-year low because of a drought and as farmers rebuild the herd.

The Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) forecast beef exports of 1.085 million metric tons in the current season, up 7 percent from a year earlier.

Increased demand from China, where consumption of Australian beef is expected to jump 74 percent from a year ago, will drive the growth in exports.

China will consume 160,000 metric tons of beef and veal from Australia this season, making it the third-largest consumer of the country’s beef, the commodity forecaster says.

“Our exports of beef have been very strong, particularly to the emerging markets. China has increased its imports of beef from Australia very significantly,” says Jammie Penm, ABARES chief commodity analyst.

While China’s appetite for beef is projected to continue to grow, Australian beef exports could shrink as the country’s cattle herd falls to a four-year low by the end of 2014 and, depending on weather conditions, in its major beef state.

Australia’s cattle herd will fall to 25 million head, the lowest since the 2009 to ’10 season, because of increased slaughtering, ABARES says.

Slaughtering rates

The bureau says drought conditions in Queensland state, which accounts for about 50 percent of the national herd, had encouraged greater slaughtering, albeit of smaller cattle.

It raised its forecast for slaughtered beef and veal to 8.93 million head of cattle in 2013 to ’14, up 3 percent from its previous estimate.

“If we do see an improvement to seasonal conditions, we would expect to see a reduction in slaughtering rates as local producers start to restock after the liquidation of recent months,” says Luke Mathews, commodities strategist at the Commonwealth Bank of Australia.

“That would obviously lead to some downward pressure on the volume of our exports.”

Lower production could challenge Australia’s market leader position in China. Australia is the largest supplier of imported beef to China, accounting for 50 percent of imports in the past year. Uruguay accounts for 25 percent of beef imports and New Zealand accounts for 15 percent.

But, Australia’s position is somewhat protected by the fact China does not permit beef imports from the U.S. and Brazil, two of the largest exporters, on BSE-related grounds. BSE (bovine spongiform encephalopathy), commonly called mad cow disease, is a fatal brain-wasting disease in cattle.

ABARES forecast live cattle exports at 650,000 head, up from its previous forecast of 590,000 head. Most live exports are sold to Indonesia.

The bureau also slightly lowered its forecast for sugar production from Australia, the world’s third-largest raw sugar exporter, to 4.2 million metric tons from 4.25 million metric tons previously. Sugar yields had fallen because of flooding and crop damage, offsetting larger plantings, it says.

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