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Weak Asian demand hits cattle exporter

Wellard shares have hit an all time low after Australia's biggest cattle exporter said it expects to post an annual loss as high prices for local cattle weigh on demand from Asia.

Wellard said cattle prices in Australia remain "uneconomically high" as farmers hold stock and grow their herds.

"These sustained high prices have meant that the traditional Indonesian and Vietnamese live export markets have been depressed, with buyers reducing the number of cattle purchased and not willing to absorb or pass on the increased costs," the company said on Tuesday.

Wellard said its previous expectations of market improvement at this point in the season had not materialised, with conditions remaining extremely difficult.

"Our markets continue to defy normal seasonal trends, with previous positive signals being brief and not sustaining," managing director Mauro Balzarini said.

Exports of feeder and slaughter cattle across the industry were also significantly lower.

Wellard expects that its trading loss in the second half of the financial year will be significantly larger than its $16 million first-half loss, and indicated an annual pre-tax loss of between $55 million and $65 million.

That excludes any impact from potential asset impairments and writedowns.

Wellard shares dropped to an all-time low of 14.5 cents on the news, down five cents, or 25.6 per cent.

Wellard said it is continuing to review operations and costs and has cut staff and overheads in its domestic and overseas operations.

The company has improved its trading terms with suppliers and is chartering vessels to third parties to help cover vessel costs and long periods of under-utilisation.

Wellard has completed the sale of its ship, the M/V Ocean Outback, which will return about $17.6 million to the company, and retire about $15.6 million in debt.

Wellard said there had been ongoing breaches of its banking facilities at June 30, 2017, but the company was working with its bankers on the provision of waivers.

Austrlaian Associated PressBack to Breaking News

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