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Higher Brazilian beef prices good news for Australian industry

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article image Wendy Voss - Higher Brazilian beef prices good news for Australian industry

The days of cheap Brazilian beef being widely available in the world market appear to be over and that’s good news for Australia’s cattle industry, according to a new report by Agri finance specialist Rabobank .

With the global beef giant of Brazil one of the Australian cattle industry’s most feared competitors, recent record prices for Brazilian cattle (exceeding even those of Australia) provide new opportunities for Australian sales in export markets, Rabobank’s Global Focus report, Australian Beef: Living with Brazil says.

Report author Rabobank senior analyst Wendy Voss says Brazilian cattle prices have seen an upwards shift, and while the cattle price cycle will continue to ebb and flow, they will remain at well-above historical levels.

“Brazil is no longer the low-cost supplier of beef to the global market that it once was,” Ms Voss says.

“The growth of the beef industry in Brazil has been nothing short of incredible. However, in recent years the competitiveness of Brazilian beef has fallen, as production has struggled to keep pace with local and global consumption growth. This has seen export prices surge, opening the way for increased Australian beef sales into some traditional Brazilian markets like Russia, the Middle East and South-East Asia.”

Ms Voss says within Brazil, beef production has slowed due to the combined challenges of rising input costs, surging land prices, and competition from other commodities.

The Rabobank report shows Brazilian cattle prices are expected to remain at record levels in 2011 before easing from 2012. However, continued strong domestic and export demand, together with restrictions on global beef supply, means that the fall, and the impact on Australia, will be limited.

“As demand for meat in developing markets continues to rise, developed markets recover, and production remains restricted in major producing countries, the world will need both Australia and Brazil to supply global beef markets,” Ms Voss says.

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