Australian beef seen strong despite US-Japan trade

Strong Australian beef prices were expected to slip in 2005 as US exports gradually return to Japan and Korea, officials said on Tuesday. Beef is Australia's top rural export, worth over A$4.7 billion ($3.7 billion) in 2004, and exports were set to remain strong in 2005, the Cattle Council of Australia said. A ban on imports of US beef by Japan and Korea after a single case of mad cow disease was found in the American herd in December 2003 has helped buoy Australia's beef exports.
Japan, already Australia's largest export market, switched imports to Australian beef after banning the US product. Before the ban, Japan was the top overseas customer for American beef, buying $1.4 billion worth in 2003.
In October, Japan agreed to accept shipments of US beef from animals 20 months or younger. But frustrated over the long ban on the bulk of the trade, the US industry is increasing pressure on Japanese authorities to end all bans.
The outlook for Australia's beef industry for 2005 looked positive, but there would be challenges, parliamentary secretary for agriculture Senator Richard Colbeck said on Tuesday. "The biggest impact will be the re-entry of US beef into Japan and Korea," he said in a statement.
"While saleyard prices are likely to experience a modest fall, they should remain close to 2004 averages, assuming the US beef return to Japan and Korea is gradual," he said. South American countries, led by Brazil, had become a real threat to the Australian industry, particularly in its lesser markets, he said.
Australia and Brazil were neck-and-neck as the world's biggest beef exporters in 2004. South American exports had flourished because of low costs and extremely competitive exchange rates, Colbeck said.
Australia's live animal trade had a difficult year in 2004 and 2005 was likely to remain difficult because of rising price competition and an increase in animal welfare activism, he said.
Australia is the world's largest exporter of live cattle and sheep, but controversy over a 2003 shipload of sheep sent to the Middle East, which could not be offloaded for around three months helped trigger opposition to the trade.
Over 84 percent of Australia's total agricultural area is used for cattle production, while over A$118 billion is invested by cattle producers in land, livestock and equipment, said Bill Bray, the cattle council president.