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Currency, drought and high demand to push beef exports to record levels: MLA

Beef Central 29/07/2013

MLA chief economist Tim McRaeRecord Australian beef exports are forecast to continue in 2013, the combined result of high slaughter levels due to drought conditions, sustained growth in emerging markets and the recent devaluing of the A$.

Meat & Livestock Australia’s mid-year Industry Projections update released just minutes ago suggests the tough production conditions seen across northern Australia will continue, while in southern Australia good seasonal conditions going into spring should have a positive impact on the market.

A positive rainfall outlook for southern Australia for the next three months, combined with recent good winter falls, is expected to contribute to a tighter supply of cattle heading into spring, MLA chief economist Tim McRae says in the report.

This would be in stark contrast to conditions for producers across northern Australia, who will continue to face very tough conditions until the onset of the next wet season.

Mr McRae said beef exports for 2013 were forecast to set a new record above one million tonnes, driven by recent depreciation of the A$ and growth in the Middle East and China markets which had increased export demand for Australian beef, but also led to declines in volumes to Japan and the US.

“The development of emerging markets for Australian beef in recent years, most notably China and the Middle East, has helped to buffer tough trading conditions in traditional markets,” he said.

Tough trading conditions for Australian beef to Japan have continued, with sluggish consumer demand, currency volatility and increased competition for market share from US product. Exports to Japan are forecast to total 290,000t for 2013 the lowest annual level since 2003 when the market collapsed after the discovery of BSE, and prior to the restrictions placed on US beef.

Mr McRae said Australia has been able to capitalise on current market access advantages in China and the Middle East.

“China has been the growth market for beef exports as the growing economy, tightening of import regulations and increased consumer demand for imported beef has provided an opportunity for Australian beef to capitalise on – assisted by limited access for US and Brazil beef.”

“Beef exports to the Middle East have also continued to grow, assisted by the ban of Brazilian beef to Saudi Arabia.”

Australian beef exports to Korea are anticipated to be steady for 2013, however volumes will come under pressure into 2014 as Korea’s declining tariff on US beef reduces further as part of the US-KOR Free Trade Agreement.

Live cattle exports are forecast to reach 575,000 head in 2013, with any further growth heavily dependent on discussions for improved partnerships between Australia and Indonesia.

  • More mid-year projections reports on Beef Central later today.

 

 

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