THE future for Australian beef is bright as competitors worldwide deal with challenges on their home front.
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That was the message to take away from the Westpac commodities futures seminar at the NSW Beef Spectacular and Farm Trade Expo at Dubbo last month.
Westpac senior commodities analyst agribusiness, Neil Bur-gess, said other major exporting countries were facing problems at home that could severely affect the global beef output.
“The US is the major competitor for the Japanese markets,” he said.
“And the US is going through a tough time right now, while Australia is just emerging from a tough time.”
High feed prices were beginning to cut into the already embattled US farmers, who were facing a “battle for acres” as biofuels became a market force.
Mr Burgess said the US herd and export numbers were getting smaller.
This year, the country expected to lose 200,000 tonnes of export beef.
To add to these woes, the US was also afflicted by dry, cloudless skies across the beef belt.
In the past seven months, soybean values had jumped 45 per cent, and corn prices had lifted a staggering 75pc.
The price rises were largely due to competition from ethanol.
“The biofuels industry wants an extra 15 million acres (6.07 million hectares) of corn to satisfy the current demand for ethanol,” Mr Burgess said.
“There is a bill currently before the US Congress to lift ethanol content from 11pc to 15pc, which will obviously require a lot more acreage turned over to biofuels.”
High cotton prices were also pushing farmers to alter their livestock/cropping balance.
Cotton in the US was currently reaching up to $1000 a bale.
In contrast, the Australian market was still looking strong.
Mr Burgess predicted the Eastern Young Cattle Indicator (EYCI) would maintain its strong prices.
“Restockers will be facing some pain over the next few months,” he said.
“But I think they will be rewarded on the other side – the fundamentals of the market are strong.”
Westpac head of beef, Mark Middleton, said the Australian export market was forecast to lift three to four per cent in the next year.
“We are the second-largest exporters of beef in the world after Brazil, and the estimated value of our export market is about $7.7 billion,” he said.
Mr Middleton said one of the pressing needs for the Australian beef industry was an increase in export processing facilities.
“It’s a very difficult and challenging environment,” he said.
“I am confident there will be foreign investment in the processing industry, but it is still benefiting Australia by being on Australian soil.”
Mr Burgess believed processing capacity would not increase in Australia in the short term.
“Long term, of course it will, because the industry will grow,” he said.
