Currency turmoil hits Australian cattle trade

Currency turmoil hits Australian cattle trade

SYDNEY (Reuter): Australia's big live cattle trade has been
hit by the sharp fall of currencies in Indonesia, the Philippines
and Malaysia, the Cattle Council of Australia said yesterday.

Orders had been badly disrupted and ships held up or diverted
until the Southeast Asian currency turmoil stabilized, the Cattle
Council said in a national cattle market bulletin.

Southeast Asia in recent years has emerged as major markets
for Australia's booming A$350 million live cattle export trade.

However, the impact on Australian cattle producers had been
minimal as the seasonal cattle turnoff had ended and as beef
markets had improved, it said.

Australian cattle priced showed their best rises for four
years in August and September, restoring some hope to cattle
enterprises, the Cattle Council statement said.

Strong export demand and a weak dollar, together with some
useful rain across eastern Australia, all added to a fairly
buoyant mood in cattle markets, it said.

For the first time in many years the market mood was
unambiguously positive in all Australian states and across all
categories, it said.

The clear lead was being set by the recovery in South Korean
and Japanese demand, it said.

Near-term price prospects continued to look promising due to
the September peak in Korean purchases, the buildup to the
seasonal peak in Japanese demand in November/December and the
expected recovery in U.S. prices once the latest E.coli scare
settled, it said.

Domestic cattle supplies also remained at unsustainably high
levels and could be expected to decline at some stage, it said.

"The big threat to this bright near-term picture is the
continued forecasts for a major spring and summer drought in
eastern Australia," it said.

"Such an event would keep Australian supplies high and quality
low, forcing many producers to take discounted prices for
unfinished stock," it said.

"Latest rains have given a kick start to spring pastures but
with water tables at abnormally low levels good follow-up rains
will be needed to ensure a decent spring," it said.

Cattle turnoff and beef production remained remarkably high
despite improved cattle prices and recent rains, it said.

The cattle kills in Queensland and New South Wales were 40
percent and 20 percent above August last year respectively, it
said. The female kill was particularly large, indicating
continued herd liquidation.

August saw continued improvement in export beef prices to
Japan.

The drought, which is affecting much of eastern Australia, had
caused supplies of suitable cattle to become scarce, it said.

This, coupled with rising demand for imported beef, resulted
in the long-awaited increase in prices.

Korean demand for Australian beef was also reaching a
momentary peak due to the coincidence of large government
tenders, the seasonal absence of New Zealand competition and the
slanting of tenders toward grass fed product, it said.

The recovery in the U.S. manufacturing beef market in July
proved short-lived as a major E.coli incident caused prices to
fall sharply in August and early September, it said.