2013 slaughter surge still evident in September beef exports

Jon Condon, 02/10/2013


WHILE there was a modest decline in Australian beef exports during September compared with the previous month, comparisons with September last year reflect the high rates of drought-induced  cattle turnoff that have persisted so far throughout 2013.

Monthly export statistics released yesterday afternoon by the Department of Agriculture, Forestry and Fisheries show that total beef exports for September reached 94,923 tonnes, a 3.5pc decline from August figures, and well short of the all-time shipment recorded of about 106,000t set in July.

Compare September performance with this time last year, however, and a different story emerges.

Last month was almost 19pc higher in tonnage than September 2012, when producers were still hanging on to cattle on the back-end of two exceptionally good seasons, back-to-back.

The contrast between 2012 and 2013 is made even more apparent in calendar year-to-date export comparisons.

For January-September this year, total beef export volume has now reached 799,259t – a record for the first nine months of any year. Twelve months earlier, and exports Jan-Sept 2012 were more than 100,000 tonnes less, at 693,360t. That’s a jump this year of 15.3pc, and one of the biggest turnarounds in export activity seen in recent history.

In addition to the drought-imposed supply pressure this year, the softer A$ seen over recent months has certainly helped lift our export competitiveness. The dollar was trading this morning at US93.92c, down about US10c in value on this same time last year.


China continues to feature

While it’s now happening with monotonous regularity, China again featured prominently in September export performance, taking an additional 14,522t of Australian beef for the month.

While that’s a little down on August’s all time record of 16,192t, it is still more than three times as much in volume terms as what was seen in September last year (4060t) when the brand new trade was just starting to come to life.

Year to date, China has now taken a fantastic 108,199t for the nine months to September, compared with a paltry 9746t for the same period in 2012. That’s a rise – wait for it – of 1010 percent.

China remains well on track to reach Beef Central’s earlier prediction that the market could account for 130,000t of Australian beef this calendar year, coming out of nowhere over the past year. It is now guaranteed of being Australia’s third largest export customer in volume terms, behind Japan and the US.  

Exporters often remark that the heavily-supplied Australian export market would have been in a lot worse shape this year, except for the strong demand to emerge out of the world’s most populous nation.

While rates of beef kill recorded across Eastern states remains historically high, averaging 151,300 head per week during September, it might surprise some readers to learn that the number is higher than the weekly average for both July (149,200) and August (148,000 head). That’s due primarily to the absence of public holidays during September, rather than any real revived surge in rates of kill.

There was an encouraging strong surge in exports to the US during September, where volume reached 19,560t, a lift of 8.4pc over August (18,047t). That’s due to both currency factors, and the decline in cow kill now being experienced across the US, leaving a widening gap for Australian 90CL grinding beef. That’s reflected in pricing, with Australian frozen 90CL cow last week making A426c/kg, up from 386c/kg this time last year.

This time last year when the US was still badly impacted by drought and was killing beef and dairy cow in big numbers, Australian exports were just 17,800t for the month.

Calendar year-to-date, however, the US has taken 156,000t of Australian beef, an 8.2pc drop from the same period a year ago (170,000t), due mostly to alternate customers like China and the Middle East ‘out-gunning’ US buyers on price.

Currency movements and cross rates have also contributed to that, as has the bans on US beef in markets like Russia and parts of the Middle because of beta agonist use.    

Exports to Japan during September were more disappointing, reaching 21,766t, – down 12pc from August, and almost as much from year-earlier figures. Mounting export competitive pressure from the US, as a result of this year’s age-related protocol adjustment for US beef in Japan, is one cause.

The other was an artificially high surge in export volumes to Japan closer to mid-year, caused by an earlier cautionary approach among importers concerned about triggering Japan’s Safeguard tariff on frozen beef.

Year to date Japan has taken 219,000, down from 233,000t for the same period a year earlier, as US shortribs and other in-demand single cuts continue to flood into the market.

Korea last month took 12,700t of Australian beef, identical to a month earlier, and similar also, to this time last year. While currency movements have helped recent prospects into Korea (the US is the other largest supplier, which has appreciated in value against the A$) Australian trade into Korea continues to struggle under the weight of the lower rate of tariff applied to US beef.

Since it signed its Free Trade Agreement with Korea in 2012, the US now enjoys a 5.4pc tariff advantage over Australia in exports to Korea, and that figure will expand again by more than 2pc from next year.

That is reflected in year to Australian year-to-date exports, which have reached 99,487t through to September 30.


Other markets

For reasons explained above, the Middle East region continues to perform strongly as a customer for Australian beef, taking 5300t during August, almost double exports seen this time last year (2762t). While both August and September were down a little on an all-time monthly record of 6900t in July, this spike was associated with the Ramadan religious festival.

Year-to-date beef exports to the Middle East have reached 49,000t, contrasting with just 22,500t for the same period a year earlier.

Total export trade to the EU for September reached 1870t, similar to a month earlier, but 25pc higher than this time last year. Year-to-date exports up to September reached 14,800t, compared with 10,000t for this period in 2012. Opportunities under the expanded grainfed EU quota have driven growth.


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