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MLA manager of market information Ben Thomas.
The Australian cattle industry is bracing for a near record annual cattle slaughter by year's end.
Tight Australian beef supplies, the weaker Australian dollar and strong export demand have put that country's cattle producers in a sweet spot.
Meat & Livestock Australia's (MLA), in its latest cattle industry projections quarterly update, say producers with cattle to sell should have confidence in the market over the long term.
MLA manager of market information, Ben Thomas, says the annual cattle slaughter by year's end is estimated to reach a record high.
"This will be the third consecutive year of cattle slaughter exceeding eight million head, something never seen before. As a result, beef production is estimated to reach 2.46 million tonnes cwt – the second highest volume ever," says Thomas.
The female slaughter rate so far this year is 28% above the five year average, which will ultimately lead to fewer calves and lower beef production. Yet over the next five years Australia will still continue to produce at least 2 million tonnes of beef and veal annually.
Thomas says another important factor for the industry is the expectation of a continuing weaker A$ bolstering the demand for Australian beef.
"Cattle prices are expected to remain buoyant over the longer term, even with the usual seasonal decline expected in the final months of 2015.
"Australian beef and veal exports after the first nine months of 2015 are 4% ahead of the same time last year (a record), but in the fourth quarter we will see a continuous slowdown in monthly export volumes.
"The value of the dollar against the US currency will help maintain the value of exports for exporters and our competitive position globally."
Thomas foresees this as important for exports, with most of Australia's major competitors expecting higher production, including Brazil and India, although the US is expected to dip between now and 2017.
"This will continue to pressure our market share in regions where there is common access, yet Australian beef's high food safety profile will support its position in the market.
"The total turn-off rate illustrates how extraordinary the past couple of years have been," Thomas says.
With processors and feedlots the main buyers dur ing the third quarter, Thomas says this trend would continue until pasture and water conditions improved, giving re-stockers confidence in the market.
"Australian producers with cattle to sell should have confidence in longer term prices, given the value of our shrinking pool of cattle and high demand for our product here and overseas."
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