Domestic market claws back share of beef production

Not only has Australian beef production in 2016 slowed down from the record breaking levels of 2014 and 2015, but unsurprisingly, so too have Australian beef exports.

However, of interest and especially during recent months, while exports have been receding with production, the proportion of production exported has started edging back towards the long-term average of 65%.

The figure below illustrates the 12-month rolling average proportion of Australian beef exported, compared to what remains on the domestic market. As clearly shown, the years of record beef production led to more than 70% of production exported, which so far has been for 26 consecutive months. In effect, this raised the influence of international pressures on the Australian beef industry and is a large reason behind the extraordinary rise in cattle prices experienced during the same period.

While the most recent monthly data (June) shows 73% of Australian beef production was exported, a downward trend has commenced. At the same time, while exposure to international trade has edged lower, the Australian cattle market is now driven by the significant shortage of cattle.

The point at which the decline in the proportion of Australian beef production exported stops will be determined by the relative strength of export markets compared to the domestic, and the level at which production falls to. Considering the widely documented rising beef production in the US leading to softer prices in many international markets, it may be that there will be a return to the longer-term equilibrium of 65% beef production exported.