September beef export values keep pace with 2016

• Reflecting higher volumes, September beef export values increased by 17% year-on-year, to $681 million with year-to-date now at $5.5billion, on par with 2016.
• Unit prices ($/kg) for the year-to-date have maintained an overall average similar to that of 2016, with an increase in average export unit prices to China.
• The direction of export values will depend largely on Australian beef availability, as well as whether the anticipated depreciation of the Australian dollar and the uplift in US import prices comes to fruition.

The value of Australian beef exports in September totalled just over $681 million for the month, up 17% from the same time last year (GTA/ABS). This was largely underpinned by a 24% year-on-year increase in export volumes for the month, but offset somewhat by the Australian dollar lifting 5% over the same period, averaging 79.8 US¢ in September.

For the year-to-date (January – September), the value of beef shipments reached almost $5.5 billion, a similar figure to 2016. Export volumes for this period were 774,958 tonnes swt, just 1% lower from 2016.

Also underpinning the value of beef exports is the increase in proportion of grainfed beef being exported and growth in chilled beef shipments in the latter half of 2017 thus far – both of which typically attract a premium. Unit prices ($/kg) for the year-to-date have maintained an overall average similar to that of 2016, settling on $7.08/kg.

Pressure on export unit prices in Japan, the US and South Korea due to competition with US beef have been largely offset by increases in average export unit prices to China in September.

Japan

High Japanese demand for grainfed beef and the limited availability of Australian grassfed product have seen greater volumes of grainfed beef exported to Japan. This, combined with higher volumes during the month of September, saw exports to Japan total $177.1 million in value, up 15% year-on-year. Exports of both chilled and frozen beef to Japan increased in September, with chilled beef reaching $101 million, up 19% year-on-year, and frozen beef up 10%, at $76.1 million. For the year-to-date, the total value of shipments to Japan reached just above $1.48 billion, up 14% on year-ago levels.

US

Beef exports to the US totalled just under $153.7 million for September, up 43% year-on-year. This was predominantly a result of recovering US import prices and increased shipments to the US – up 62%, to 22,398 tonnes swt for September. Frozen beef makes up the majority of Australian beef exports to the US, with 16,495 tonnes swt in September, bringing the year-to-date frozen beef volume to 130,093 tonnes swt, back by 11% from 2016. Total beef export volumes for the year to date reached 178,204 tonnes swt – valued at $1.294 billion, back 7% from 2016.

South Korea

Beef exports to Australia’s third largest export destination currently, South Korea, reached $112.3 million in September, back 5% year-on-year, following a similar decrease in volume. However, September volumes of chilled product increased 23% on year ago levels, at 4,192 tonnes swt, with a 19% lift in value, to $41.6 million. Frozen product still made up the majority of shipments to Korea, with 13,065 tonnes swt in September, back 6% from year ago levels. Frozen beef values for the year-to-date were back 15%, at $809.2 million, reflecting the 13% year-on-year decline in volume, to 809,162 tonnes swt.

China

September export volumes to China lifted 9% year-on-year, consequently lifting the total value of shipments 7% to $64.2 million. Average unit values of exports to China for the year-to-date increased by 16% for chilled product (A$13.55/kg) and 9% for frozen beef (A$6.87/kg). For the year-to-date, the value of shipments to China equated to $578.3 million – following an 8% increase in volumes.

What’s ahead?

The direction of export values will depend largely on Australian beef availability, as well as whether the anticipated depreciation of the Australian dollar and the uplift in US import prices comes to fruition. 

Widespread rainfall across parts of the country and the average outlook for the coming season may see cattle supply tighten in the short-term. 2017 slaughter may drift to below year-ago slaughter levels for November and December – as widespread dry conditions saw higher turn-off in 2016.