Beef exports impacted by reduced slaughter

It is remarkable to reflect on the myriad of circumstances that have faced Australia’s export industry over the past year. Just twelve months ago, African Swine Fever (ASF) was driving demand from China to unprecedented levels while, amid drought conditions, livestock turnoff was significantly elevated.

At present, demand and supply factors have pivoted sharply due to the impact of COVID-19 and significantly reduced livestock turnoff. In August, weekly slaughter figures for eastern cattle averaged 106,000 head, well back on the five-year average (2015–19) of 139,000 head per week.   

Beef exports hit a low for the year off tight supply

Exports of beef totalled 78,000 tonnes swt in August, the lowest monthly total since January last year. Relative to last August, volumes were back 27%, while year-to-August beef exports are now back 9% on 2019, with constricting supply really starting to take hold.

The top destinations in August were Japan (19,700 tonnes swt), the United States (18,200 tonnes swt) and South Korea (13,000 tonnes swt).

Year-to-August beef exports – top five markets

• Japan: 178,000 tonnes swt (-8% on 2019)
• United States: 156,000 tonnes swt (-6% on 2019)
• China: 145,000 tonnes swt (-16% on 2019)
• South Korea: 103,000 tonnes swt (-4% on 2019)
• Indonesia: 36,000 tonnes swt (-8% on 2019)

For the first eight months of the year, total exports of chilled beef are back just 1% on 2019 levels (relative to a decline of 12% for frozen beef), with exports to the United States, China and South Korea all experiencing good growth. As the herd rebuild gains momentum, the proportion of cows to total cattle slaughter will continue to fall, which should result in a greater percentage of beef being exported as chilled prime cuts rather than as frozen manufacturing mince.   

While the first few months of 2020 saw strong demand from China for chilled beef, as affluent consumers sought high quality product for cooking at home, beef volumes to China have been impacted by the temporary suspension of five Australian establishments which would normally be significant suppliers for the market.

Interestingly, it appears that much of the product which would likely have been destinated for China is being re-directed towards South Korea and the United States. Relative to total Australian beef exports, South Korea accounted for 17% in August, up from 12% in August 2019, while the United States accounted for 23%, up from 19% last August. While China certainly remains a critical market, this ability to pivot and distribute beef to other high-value markets remains a key component, underpinning the stability of the Australian export industry.

Positive signs for lamb exports

Exports of lamb in August were 19,200 tonnes swt, a 9% lift on the same month last year. The strong lamb prices seen through June and July bolstered production levels, certainly to the benefit of export markets.

Year-to-August lamb exports – top five markets

• China: 44,000 tonnes swt (-1% on 2019)
• United States: 39,000 tonnes swt (+1% on 2019)
• Qatar: 12,000 tonnes swt (-6% on 2019)
• United Arab Emirates: 11,000 tonnes swt (-16% on 2019)
• South Korea: 8,900 tonnes swt (+10% on 2019)

Lamb exports to key Middle East markets softened during the first half of 2020 due to COVID-19 restrictions on air cargo flights and dine-in foodservice, as well as the impact of lower oil prices on consumer spending confidence. However, August lamb exports to MENA should inspire some confidence in the market, as volumes bounced up 19% July on levels and sat even with last year. This trade was supported by renewed interest from Qatar and the UAE. A lift in demand may be aligned with the fact that the summer cessation on live exports to the Middle East is nearing its end and animal protein supplies across these destinations could be running low.

A further consideration is that lamb supplies coming out of New Zealand are typically reduced through August and September, due to the seasonal pattern of New Zealand sheepmeat production. Therefore, in the coming months, markets may look to Australia for more support when New Zealand offerings ease, which could offer some much-needed price support.

Mutton exports bounce back after eight-month consecutive decline

Mutton exports have been hampered significantly this year, as the supply availability of sheep has been greatly affected by the drought-induced turnoff through 2019. Since falling in volume every month since last November, exports of mutton in August were 8,900 tonnes swt, marking a solid improvement on volumes seen over the past few months. Highlights for August were that mutton export volumes to China, Malaysia, and the Middle East all sparked up after a few particularly quiet months.   

Year-to-August mutton exports – top five markets

• China: 25,000 tonnes swt (-37% on 2019)
• United States: 14,000 tonnes swt (+23% on 2019)
• Malaysia: 11,000 tonnes swt (-2% on 2019)
• Saudi Arabia: 5,000 tonnes swt (+4% on 2019)
• Singapore: 5,000 tonnes swt (-19% on 2019)

Goatmeat exports struggling

Goatmeat exports in August were 1,000 tonnes swt, with year-to-August volumes now back 39% on 2019. The United States remains the key destination for goatmeat, accounting for 59% of total goatmeat exports 2020, followed by Taiwan and South Korea, which account for 13% and 8%, respectively.

Year-to-August goatmeat exports – top three markets

• United States: 5,200 tonnes swt (-49% on 2019)
• Taiwan: 1,200 tonnes swt (-24% on 2019)
• South Korea: 700 tonnes swt (-25% on 2019)

© Meat & Livestock Australia Limited, 2020