Bloomberg News

Australia Floods Seen Boosting Cattle Prices as Supply Shrinks

January 30, 2013

Cattle prices in Australia may extend gains from the lowest price in three years as floodwaters boost grass growth, prompting farmers to retain animals, said Australian Agricultural Co. (AAC), the nation’s biggest beef producer.

“Traditionally when you have rains like that, we go about maximizing the growth of the animals instead of taking the animal to market,” Chief Executive Officer David Farley said in a conference call today. Prices have risen 6 percent through yesterday from the three-year low on Jan. 15.

Floodwaters in eastern Australia retreated and cleanup crews moved in after ex-tropical cyclone Oswald forced thousands of people to flee their homes. The country’s cattle herd stood at 29.5 million head at June 30, the highest since 1977, according to Meat & Livestock Australia. Beef exports may gain 3.2 percent this year, boosted by shipments to the U.S., where farmers are culling animals after a drought increased feed prices to a record, according to the Sydney-based industry group.

The Eastern Young Cattle Indicator, which measures prices at sales in the nation’s east, rose 1.5 percent to A$3.295 ($3.43) a kilogram yesterday. Prices dropped to A$3.108 on Jan. 15, the lowest since January 2010.

“The amount of rain now should tighten supply for the next four to five months,” Farley said. Australia, the world’s third-largest beef exporter, is poised to benefit from declining supplies in the U.S., he said.

The U.S. herd dropped to 97.8 million head as of July 1, the smallest for the date in at least 39 years, as the most- severe drought since the 1930s spurred ranchers to cull animals, U.S. Department of Agriculture data show.

Cattle for April delivery rose 0.2 percent to $1.3315 a pound on the Chicago Mercantile Exchange at 9:42 a.m. in Singapore. Prices climbed to a record on Jan. 11.

To contact the reporter for this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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