February beef exports show upside, but strength is in frozen

Jon Condon, 04/03/2012


A solid lift in trade to the US underpinned a strong overall rise in Australian beef export volumes during February, Federal Government figures released on Friday show.

Total beef and veal exports last month reached 78,704 tonnes according to DAFF statistics, up from just over 47,000t in January.

The February figure was even higher than the same month last year (77,125t), when Australian processing rates were hitting two-year highs, due to strong international beef demand. Weekly February kills last year averaged just shy of 150,000 head, and included a February 7 figure of 152,305 head – the highest tally seen in more than two years.

As highlighted in Beef Central’s Friday story, “Explosion in grinding beef trade to US,” trade to the US last month reached 23,340 tonnes. That was double the level of trade seen in January (11,774t), and 80pc higher than shipments in February last year (13,262t).

A significant feature is the growing frozen component to Australia’s exports, as the momentum in manufacturing beef exports continues to take hold. So great is the emphasis on frozen trade at present that frozen cold storage space in major departure points like Brisbane/southeast Queensland is now in very short supply, industry contacts say.

The Japanese market is a good example, where Australia’s February chilled beef trade was down 26pc, compared with year-ago levels.

Overall frozen and chilled Australian exports to Japan reached 23,456t in February. That result was up about 28pc from typically-lower January shipments (16,799t), but down 22pc on February last year (importantly, the last full month of trade prior to March’s earthquake/Tsunami disaster, from which the Japanese economy is still recovering.)

Trading conditions for Australian beef in Japan remained difficult last month, with increasing shipments from competitively-priced US exporters, and the robust A$ making Japanese buyers extremely cautious about their commitment to Australian beef.

In the Japanese wholesale market last week, most chilled grassfed beef prices averaged higher than a week earlier, aided by limited supplies.

Other markets firmer

Other export market customers showed mixed results in February, but the general trend was upwards from seasonally-slower January trade.

South Korea took 9556t of Australian beef, considerably better than January, but a long way short of trade in February last year totalling 15,299t.

While trade sources say Korean importers are dealing with flat demand and high stock levels, another trade influence may be coming from to the recent announcement that the Korea-US Free Trade Agreement will come into effect on March 15.

With the initial 2.67pc import tariff reduction on US beef from that date, importers will not want to get caught with excess Australian beef, or even US beef for which they have paid a higher earlier tariff rate.

Overall trading activity in the Korean wholesale market remains subdued, as beef demand is historically slow during the post Lunar Year season.

Australia’s February trade to CIS (Russia) reached 2939t, up from 1215t a month earlier as the post-winter-thaw access to ports started to improve, and close to February’s figure last year of just over 3000t.

The Indonesian market, heavily dominated by frozen manufacturing-type beef, saw February shipments reach 2709t, a big rise from 1182t the previous month and 2303t in February last year. Contrast this with 2010 and 2009, however, when monthly beef shipments averaged 4000t and 4300t respectively.

Total Middle Eastern exports last month reached 2210t, with heaviest trade into Dubai and Jordan. The Middle Eastern trade was up about 30pc on January figures, and almost as much on February last year.  


Growth in EU trade, where local supply tightens

Total exports to the EU in February reached 920t, a small improvement on 848t this time last year.

The latest EU Commission Short Term Outlook forecasts that EU cattle prices will remain high in 2012, despite a decline in exports of both meat and live animals. The EU Commission says it expects domestic carcase prices for all categories to remain higher throughout 2012, due largely to limited supplies, with increased competition for earlier marketed finished cattle helping to offset higher feeding costs.

EU beef and veal production is forecast at 7.92 million tonnes for 2012, down 4pc on 2011. After a strong year for beef and veal exports in 2011, particularly to Russia and Turkey, EU beef and veal shipments are predicted to contract 29pc in 2012, to just 235,000t.

In contrast, EU beef imports are forecast to recover somewhat in 2012, as tight domestic supply and a gradual recovery in availability of supply from traditional suppliers helps to rejuvenate import volumes. However, while imports are forecast to increase 10pc, or 30,000t in 2012, overall EU per-capita beef consumption is still predicted to fall another 2pc.

Like many other markets, EU cattle prices reached record highs in 2011. Tight global supplies of beef in 2011 led to falling imports into the EU, while the very weak EU currency assisted exports, forcing domestic cattle prices higher.


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