960423

Australia sees price

correction in grain/beef

SYDNEY: Australian livestock industry executives believe record high U.S. grain feed prices will bring about an international correction which will improve Australia's beef export prospects in a year or two.

A downward correction in international grain prices and an upward correction in beef prices are both expected to be influenced by a looming downsizing of the U.S. livestock herd, the executives said.

"It is critical that U.S. livestock supplies begin coming back," said Peter Weeks, deputy director of the Cattle Council of Australia.

When the U.S. faced the same costs of production as Australia, there would be reduced problems for Australia in export competition with the U.S., he said.

Sewell predicted that the U.S. livestock industry would begin to fully feel the effect of current grain prices in the third quarter of calendar 1996.

In turn, the Australian livestock industry would begin to feel beneficial effects from this in about a year's time, he said.

"Probably there's no light at the end of the tunnel (for Australian exporters) this financial year," he said.

Weeks said the sky-high price of grain in Australia had already had a dramatic effect on the livestock industry.

The Australian grainfed sector had been downsized over the past 18 months, while the grassfed sector had recorded a commensurate increase, he said.

"We're seeing a fair shift and that's being reflected at the moment in exports to Japan, the main market."

Grass-fed exports this year are up about nine percent while grain-fed exports were down by about seven percent, continuing the trend established last year, he said.-Reuter