Meat & Livestock Australia - Cattle Projections_100809


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Tim McRae - Economist, International Markets and Economic Services - in conjunction with Meat & Livestock Australia share a mid-year update on the Australian cattle industry projections.

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Meat & Livestock Australia - Cattle Projections_100809

  1. 1. Australian cattle industry projections mid year update Tim McRae – Economist, International Markets and Economic Services 10th August 2009
  2. 2. A tumultuous past 12 months <ul><li>The global economic and financial environment got very ugly, very quickly - recessions in US, Japan, Europe…and almost Australia </li></ul><ul><li>Massive currency fluctuations…the A$ went from 98.5US ¢ (July 08), to 61.2US ¢ (Oct 08) and then back to 84.5US¢ (Aug 09). </li></ul><ul><li>Demand for beef was altered in almost all markets, with consumers trading down purchases towards cheaper beef cuts and items…strong demand in fast food sector. </li></ul><ul><li>Very difficult beef trading conditions for Australian exporters, compounded by the plunge in hide and co-product returns. </li></ul><ul><li>High input costs subsided – grain, finance, fuel etc… </li></ul><ul><li>Floods in the north, drought in the south…but overall an improvement in conditions for the cattle industry. </li></ul>
  3. 3. Changes from January projections <ul><li>Given these changes in the supply and demand landscape, changes from the January projections include… </li></ul><ul><li>Contraction in beef and veal exports for 2009 – back 4% to 950,000 tonnes swt </li></ul><ul><li>Cattle slaughter revised back 3%, or 250,000 head, as producers retain cattle </li></ul><ul><li>Average carcase weights revised 3kg lower, to 270kg/head </li></ul><ul><li>But medium/long term outlook remain relatively unaltered … </li></ul><ul><li>Australian herd expand toward 30 million head </li></ul><ul><li>Export demand to recover from 2010 onwards </li></ul><ul><li>Global beef demand/supply balance to tighten, lifting prices </li></ul>
  4. 4. Economic growth, 2009 a shocker…but things to improve
  5. 5. A$ plummets…but then bounces back
  6. 6. Returns* from co-products fall Potential return
  7. 7. But producers have seen a fall in costs
  8. 8. Australian saleyard cattle prices have improved in the past 3 months - EYCI
  9. 9. Lower costs boost farm cash incomes
  10. 10. Not a bad past 12 months…especially in northern Australia
  11. 11. Good past 3 months…but much more needed in southern Australia
  12. 12. Australian cattle herd to expand towards 30 million head
  13. 13. Record proportion of female cattle to underpin herd growth
  14. 14. Australian herd continues to move north
  15. 15. Australian cattle turnoff to recover in 2010
  16. 16. Australian beef and veal production to steadily rise
  17. 17. Australian cattle on feed numbers to slowly recover
  18. 18. Beef exports to expand from 2010 onwards
  19. 19. Australian beef exports to Japan to increase 3% in 2010
  20. 20. Export prices to Japan fail to benefit from lower A$ in first half of 2009
  21. 21. Grainfed exports and prices to Japan
  22. 22. Australian beef exports to Korea to face increase competition
  23. 23. US to increase Korea presence in 2010
  24. 24. Australian beef exports to US to recover 13% in 2010
  25. 25. US cattle herd declining, with production falling
  26. 26. Australian exports to Indonesia a highlight…
  27. 27. Restrained exports to Russia … 2008 was “out of the box”
  28. 28. Australian beef exports to China and Hong Kong to record levels
  29. 29. Australian beef exports to Middle East to consolidate growth
  30. 30. Australian beef consumption to decline
  31. 31. Australian live cattle export to register steady growth
  32. 32. Indonesia will continue to underpin cattle shipments
  33. 33. Beef and cattle industry overview <ul><li>“ Exporters are currently grappling with tight livestock supplies, higher Australian dollar, weak co-product prices and low import prices. It probably won’t be until 2010 that exports will start to really gather steam. Over the medium to long term, Australia’s slowly expanding beef production is forecast to be met by rising global demand, especially as economic conditions improve in Australia’s major beef markets,” </li></ul><ul><li>Through to 2013: </li></ul><ul><li>Further herd growth, underpinned by stronger prices and profitability </li></ul><ul><li>Feedlot industry to steadily recover, reaching record numbers in late 2011 </li></ul><ul><li>Beef and veal exports to exceed 1 million tonnes swt in 2010 </li></ul><ul><li>Live cattle exports to resume growth in 2010, reaching 850,000 head </li></ul><ul><li>However much depends upon: </li></ul><ul><li>Speed of economic recovery – US, Japan, Korea, Australia </li></ul><ul><li>Value of the A$ </li></ul><ul><li>Seasonal factors </li></ul>