FLOUNDERING export demand and the performance of the Australian dollar were the two biggest factors to dictate cattle prices this year.
Cattle prices averaged 5 per cent lower in 2009 and ended the year 15 per cent below last December, according to Meat and Livestock Australia.
This was despite overall throughput decreasing 5 per cent in yards monitored by the National Livestock Reporting Service and an increase in restocker activity across all categories, underpinned by a good spring across much of southern Australia.
The number of cattle returning to the paddock from NLRS-monitored yards increased 14 per cent this year with graziers securing 35 per cent more heifers and 40 per cent more cows to rebuild herds.
At the same time, the number of cows and grown heifers offered in saleyards declined 7 per cent - the greatest contraction across all the cattle categories.
While the Australian dollar last week dipped to it's lowest level since October, it is forecast to average US89c over the remainder of 2009-10.
This underwrites the latest ABARE predictions, which forecast an 8 per cent slump in the value of beef exports year-on-year to $4.5 billion and a further 5 per cent drop in average saleyard prices to 282c/kg this financial year.
MLA chief market analyst Peter Weeks said he expected the first half of next year to be tough, but hoped stabilising export markets could provide some reprieve for producers.
"Buyers have managed (this year) by not holding stock or buying forward," Mr Weeks said.
Export buyers who had been burnt by currency movements of up to 10 per cent while their product was in transit had resorted to operating hand-to-mouth, he said.
"A return to stability in their markets will see buyers start to buy forward again," he said.
Mr Weeks said a more fundamental improvement in prices would rely on consumer demand from Japan, Korea and the US improving.
"Korea is showing signs of picking up, but the US will be aggressively targeting this market," he said.
Australia will focus on Japan and the US instead, he said, where consumer confidence and demand was likely to improve in line with a more positive job market during the second half of next year.
Demand from both countries has been especially weak this year.
The Eastern Young Cattle Indicator finished the year at 283.25c/kg - it's lowest point in two years, making 2009 a year to forget for many beef producers.
Still, some light remains at the end of the tunnel, according to Mr Weeks.
"The main positive for next year will be the prospect of a normal season with good monsoon rains in the north and tighter supplies," he said.
"And tight supply tend to keep prices from falling any further."
