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Further Australian Dollar Declines to Boost Livestock Markets

30 October 2015

AUSTRALIA - A declining Australian dollar (A$) during 2015 has favoured Australia's red meat industry, Meat and Livestock Australia (MLA) has reported.

MLA said that the A$ commenced the year at 82US¢ and as at 27 October was 73US¢, meaning that Australia’s competitiveness has improved for any meat traded in US$ terms.

Currency fluctuations can have a large influence on global trade flows, and as Australia is a net red meat exporter this can consequently impact livestock prices.

The declining A$ occurred over the same period as a correction in the US cattle market, and as a result meant that Australian cattle prices were cushioned from the US impact. For the Australian cattle market to have continued finding new highs, while the US was falling rapidly, highlights the influence of currency on the cattle market.

The Eastern Young Cattle Indicator (EYCI) peaked at 595A¢/kg cwt in September, up 58 per cent from the close of markets in 2014, while the CME feeder steer index in the US was down 19 per cent over the same period, at 418US¢/kg cwt.

On the demand side, while the US is the largest importer of Australian grassfed beef, it is also a competitor in markets like Japan and Korea.

Influenced by the weaker A$ relative to the US$, Australia’s imported beef market share in Korea and Japan improved in 2014-15, at 56.3 per cent and 56.6 per cent, respectively.

MLA said the A$ is expected to decline further in 2016, giving further help to Australian livestock markets.

TheCattleSite News Desk



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