Australia raises 2014/15 beef export forecast as dry conditions linger

SYDNEY: Australia raised its forecast for 2014/15 beef exports by 1 percent as continued dry conditions force farmers to slaughter animals at a soaring pace, and said the United States was set to emerge as the biggest customer.

Shipments from the world's No.3 beef exporter are expected to total 1.13 million tonnes in 2014/15, the Australian Bureau of Agriculture, Resource Economics and Rural Sciences (ABARES) said on Tuesday, up from June's estimate of 1.12 million tonnes and just below last year's record of 1.18 million tonnes.

Unable to find enough food and water to keep animals alive, the Australian cattle herd is set to fall to a five-year low of 27.1 million at the end of the 2014/15 season, reflecting two consecutive years of soaring slaughter rates, ABARES said.

"If seasonal conditions fail to improve in the short term, the calving rate will be lower and slaughter higher than currently assumed.

This would result in the beef cattle herd falling below the current forecast," ABARES said.

Slaughtering in 2013/14 hit a 35-year high of almost 9.5 million head, on unfavourable seasonal conditions, particularly in Queensland and northern New South Wales, ABARES said.

Much of Queensland, which is Australia's largest cattle producing state, has received less than half the average rainfall over the last two years.

The United States is set to emerge as the top buyer of Australian beef in 2014/15, ABARES data shows, replacing Japan which has held the position for the past 12 years.

The bureau expects the United States to import 290,000 tonnes of Australian beef and Japan to buy 265,000 tonnes, up from a prior estimate of 270,000 tonnes for both.

The US herd fell to its smallest in 63 years earlier this year and as farmers look to rebuild, supplies to processors have eased, ABARES said, stoking demand for Australian beef.

The bureau also raised the forecast for Australia's live cattle exports by 1 percent during the 2014/15 season, with sales expected to top 1 million head for the first time. It had previously pegged live cattle sales at 990,000 head.

Meanwhile, ABARES lowered its wheat export estimate for 2014/15 by 3 percent to 18.102 million tonnes, having pegged sales at 18.66 million tonnes in June.

ABARES last week lowered its production forecast as dry weather curbed yields across the east coast of the country, the world's fourth largest exporter of the grain.

Australian sugar production was seen at 4.6 million tonnes, unchanged from ABARES' June estimate.