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Russian cash cow fades for beef producers

Posted on February 6, 2009, 9:09am

The global economic crisis is impacting on beef prices, with several shipments of cattle leaving Australian shores for Russia, then returning as a result of non-payment.

However, a lower Australian dollar should help get more beef into the United States, according to MLA Livestock Reporting Service analyst Chris Bailey.

Additionally, lower interest rates and a lack of numbers might help stabilise and lift prices for the region’s beef producers.

“The export side of (beef prices) are still driven by demand overseas,” Mr Bailey said.

“A lot of countries, particularly Eastern Bloc countries, are struggling to get finance to buy our meat, even though they want it.

“That is basically the global financial trouble; they just can’t get money to buy the meat.

“None of the processors here are willing to send shipments of meat on the pretext they might not get paid.

“What we saw late last year before Christmas was a number of shipments (to Russia) come back home.

“Exporters just couldn’t get their money for them.

“They ended up as part of the boxed beef trade and that’s part of the reason cattle prices have been a bit cheaper, because of all the meat that is around.”

Additionally, during a long-running heat wave, Mr Bailey said there was some buyer resistance to red meat on the domestic market.

“It was only the Russian shipments that were returned,” Mr Bailey said.

“The Russian trade has been a real bonus for processors over the last 12 months.

“But with the dollar back to 63 cents (against the American dollar), that should help us get into America.

“I think it will be interesting over the next 12 months to see where we (beef producers) are.

“A lot of people have gone out of stock here in the South East and Western Victoria now.”

Mr Bailey said many producers had turned to cropping for an income in addition to bluegums.

“They’ve had some good crops, although some were affected by that December rain,” he said.

“But if we get back to normal seasons, you never know what is going to happen.

“Mainly at the moment, it’s all about being able to get money.

“Finance is going to be a lot tighter and people are going to think a lot more before they actually spend money.

“Interest rates coming down are going to help a lot of people, but sooner or later they will go up again.”

Mr Bailey believed the domestic market would soon return to normal once the heat wave was over.

“Australians like their meat and will still buy meat,” he said.

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