Imminent beef price drop darkens industry outlook

19 Jun, 2002 10:00 PM
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FOR dollars in the pocket, there's both bullish and bad news for WA cattle breeders.

The bad news first ‹ WA farmers can expect slaughter beef prices to plunge in the next few months.

The good news is that the store market is expected to remain strong, with prices in WA better than the rest of Australia, thanks to a shortage here.

The negatives affecting the cattle market include the flooding of traditional markets by extra bodies hitting WA as the result of the Queensland drought, the rising Australian dollar and the four cases of BSE in Japan.

These factors mean that the export market has dropped 30pc.

Also, the Egyptian pound has depreciated and prices are expected to come off somewhat.

On the bright side, prices are remaining firm for stores with the medium to long-term market looking positive.

"There is a strong store market in WA which I believe reflects the general confidence in cattle," Wesfarmers Landmark project development and sales manager John Cleland said.

"There has been good rainfall in the South West corner and there is an increasing trend towards lotfeeding in the Wheatbelt, even though present conditions are not good.

"It is an emerging industry and generally speaking with regard to cattle, the medium to long-term outlook remains positive."

Elders WA livestock manager Bruce McCosh also expressed his confidence.

"In comparison with the eastern states, our store market is very good and still strong here," he said.

"For example, young store feeder cattle on our market are 40c/kg better than over there.

"The South West is having an excellent season west of the line between Albany and Geraldton and winter rains had been experienced through the Pilbara."

Elders had yarded more than 500 cattle at Narngulu in a recent appraisal sale where the demand was strong and it had been estimated that 200c/kg liveweight was paid for some cattle.

But on the other side of the ledger, look out for a slump in prices for slaughter cattle.

WA meat market major player Harvey Beef is urging cattle producers to prepare ‹ and budget ‹ for a sharp drop in cattle prices.

"Harvey Beef took 20c off its schedule last week and announced a further 25c reduction for the week starting June 10 and if market prices continue to drop, further reductions in the schedule will be necessary," Harvey Beef CEO Garry Minton said.

"We are desperately trying to do the right thing by our suppliers, but we can no longer sustain the losses we have incurred on the previous price schedule.

"I believe we have a responsibility to warn producers ‹ who are still paying relatively high prices for store cattle ‹ that they needed to budget for a period of lower returns for their finished product while the current world market forces are at play."

He believes that WA has reached the stage where supply had outstripped demand and the reduction in prices paid to growers was imminent.

"All players are undercutting the previously stronger WA prices, simply in a bid to shift product," he said.

There are mixed signals coming from the industry judging by the comment from Wesfarmers Landmark auctioneer Tommy Trigwell after the company's recent Brunswick store sale.

"All farmers are disappointed with the rumours spreading throughout the South West that the export market is taking a huge dive," he said. "We at Wesfarmers Landmark are very pleased with the support from South West farmers who have faith in the future of the market and bid strongly at our Brunswick store sale."

€A total of 110 workers lost their jobs at Harvey Beef last week when the company reduced shifts from seven days to a five-day shift. The company hoped to re-employ them when numbers of slaughter cattle rose again.

€One WA farmer returning by road from the eastern states was told at the WA border that five road trains of NT cattle heading west were destined for the WA market.

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