Markets Slaughter Meat Processing

Zilmax Ban and Tight Supplies to See Australia Take Reins

10 October 2013

2 minute read

GLOBAL – Agribusiness experts have predicted that Australian cattlemen will take the lion’s share of emerging market trade in the coming months while US cattle supplies remain tight.

Rabobank’s third quarter report for the global beef industry has predicted a demand ‘surge’ across Asia as imports respond to a demand increase in the advent of the Chinese New Year in February.

The outlook has summarised that, after extensive liquidation, the additional complication of Zilmax will inevitably lower US beef supply further, allowing Australian exporters to profit, ‘instead of the US market’.

On the subject of Zilmax, the report said: 'The ongoing saga surrounding the use of the medical supplement beta-agonist in the US will negatively impact the US beef supply and therefore global beef prices in the near future.'

The combination of the most effective beta-agonist being taken off the market and a significantly smaller feedlot inventory means that, not only could the US take a back seat in exports, but the US could also offer trade to Australian exporters.

Australian beef imports to the US lifted 34 per cent last year in response to a demand rise for manufacturing beef.

Last year, contractions in the Canadian beef herd and higher domestic demand meant that US importers had to turn to options further afield, and an imports rise of 8 per cent.

This returned Australia to its place as the largest US beef supplier, according to Meat and Livestock Australia (MLA).

MLA analysts say that, after a four decade low in 2011, Australian exports, along with beef from New Zealand and Mexico, helped to ‘more than offset the fall in volumes of Canadian products’, which plummeted 22 per cent.

Meanwhile, the global cattle picture is strengthening after two years of 'steady decline'. Rabobank’s Global Cattle Price Index has shown a bottom to the world cattle market, according to Rabobank analyst Albert Vernooij.

Mr Verjooij said that the picture is brighter into 2014 but that hinges on tight supplies and demand staying strong.

“We expect further upside for the global beef market for the remainder of the year and into 2014,” said Albert Vernooij. “Looking forward, the main question in many regions is likely to be where to source sufficient beef supplies, given tight availability and increasing global demand.”

Mr Vernooij added that higher prices will probably hit the consumer: “Globally, this will support strong prices, which might be difficult to forward to the consumers,” commented Vernooij. “Nevertheless, it is positive that prices of competing proteins are also expected to remain elevated, limiting competition.”