Higher beef prices to continue

Contraction in Australia's beef production this year is expected to contribute to a continuation of high international prices.

Drought across much of Australia's major beef-producing areas in 2013 and 2014 had seen some of the largest numbers of cattle slaughtered and beef exported in the country's history, Rabobank's latest beef quarterly said.

There were 9.2 million head slaughtered in 2014 and 1.2 million tonnes swt exported in 2014, Rabobank said.

Reduction of the herd and possible improved seasons would lead to the contraction in production.

Given the tightness of the global beef market, it was expected to contribute to a continuation of high international prices and improved domestic prices for Australian producers, the report said.

While global beef supplies had been tight, higher prices had been accommodated by strong demand in China and the United States.

In New Zealand, dry conditions, as well as weak dairy prices, had underpinned much higher slaughter rates and softer cattle prices in the first quarter of 2015.

While higher domestic supply had led to a fall in farm-gate prices, high supplies from Australia had also contributed to lower prices.

Total cattle slaughter for January increased 18% year-on-year to 285,588 head. Cow slaughter surged 55% over the same period.

Demand from the US continued to underpin strong export growth. Overall January shipments were up 15% YOY to just under 40,000 tonnes swt.

Shipments to the US rose 45% over the same period, to near-record levels, and accounted for 63% of total New Zealand exports.

Farm-gate and export prices were expected to firm into the second quarter, with demand from the US expected to pick up as the country headed towards ''grilling season'' and as Australian supplies tightened.

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