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.