Aussie beef exports continue to slow with production

During September, Australian beef and veal exports were 75,405 tonnes swt – the first time a monthly shipment was sub-80,000 tonnes swt since February 2012 (excluding Januarys), according to the Department of Agriculture and Water Resources.

Indeed, exacerbating the decline has been the ongoing decay in Australian cattle slaughter with deluges across many regions in the eastern states and the herd sitting at a 20-year low of 26.2 million head. To place the drop in slaughter in perspective, the average weekly eastern states kill in September was 112,802 head this year, down 26% from the same time last year.

Australian beef shipments to the US continued to retract with production, but also felt pressure from rising US beef production and the A$, which for September this year was 7% above year-ago levels, at 76US¢. September shipments to the US were 13,942 tonnes swt – less than half what they were last year. The same three pressures for the duration of 2016 have led to Australian shipments to the market for the year-to-date declining 42% year-on-year, to 196,194 tonnes swt. However, of the lower volume shipped to the US this year, the breakdown of chilled to frozen continues to illustrate growing demand for chilled beef, with chilled accounting for 25% of exports, compared to 21% in 2015 and 18% in 2014 – most of which was grassfed.

During September, Japan remained the largest destination for Australian beef, with 20,475 tonnes swt destined to the market. While the depreciation of the A$ versus the yen was of some assistance, pressure continues to build from greater US volumes in the market, with Japanese imports of US beef up 20%, at almost 125,000 tonnes swt for the year-to-August (latest data). Like Australian shipments to the US though, the proportion of higher quality chilled beef compared to frozen is above previous years, with 45% of Australian shipments chilled.

Australian beef exports to Korea for the year-to-date continue to track 8% above year-ago levels, and are now at 128,633 tonnes swt. The value of the Korean won relative to the A$ has remained stable, but despite rising US presence, short domestic beef supplies and consequent high prices continue to favour the Australian beef in the market.

The lower Australian production combined with growing presence of Brazilian beef in China has caused Australian exports to decline 33% for the year-to-September, at 71,402 tonnes swt. Similarly, shipments to the Middle East remain subdued since Brazil’s reinstatement to Saudi Arabia, with Australian volumes down 41% year-on-year, at 24,331 tonnes swt.

To read MLA’s expectations on Australian beef production and export expectations for the years ahead, read our October Beef Industry Projections Update.