August beef export volume eases, but China sets new records

Jon Condon, 03/09/2013


Australian beef exports declined more than seven percent during August, as the peak of the drought-induced 2013 cattle turnoff begins to subside.

Rates of slaughter across Eastern Australia in August eased about 1.5pc to a weekly average of 148,000 head compared with a month earlier, and the trend was picked-up in export activity.

Beef exports to all destinations last month reached 98,401 tonnes, back about 7pc from the all-time high of more than 106,000t shipped during July.

When compared with August last year, though, Australian exports are still high, being 17,000t or 21pc higher than year-earlier figures.

The profound impact of drought-fuelled cattle turnoff is also seen in calendar year-to-date beef exports. So far this year, Australia’s international beef trade has reached 704,336t – more than 90,000t or 15pc higher than the same January-August period last year.


August exports by destination

Currency remains a big factor in recent high export shipments, with the A$ again slipping into the 80’s (USc) for the past week, hitting a three-year low of US89.2c on Friday. That’s back more than 15pc in value from its high point earlier this year of 105.42c.

Strongest evidence of that currency trend is seen in export performance to the US, where August trade has continued to grow.

The US took 18,047t of Australian beef last month, a further 2pc rise on July’s performance, and 9pc better than August last year, when the currency was worth around US104c.

The latest rise in shipments to the US comes on the back of a big kick in July, which was up 10pc on the previous month as the A$ impact started to appear, and US domestic grinding meat supply started to shorten.

Calendar year-to-date, however, the US has taken 136,291t of Australian beef, a 10.3pc drop from the same period a year ago (152,000t), 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 August were more disappointing, reaching 24,761t – down 22pc from July, and back 13pc 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 in July, caused by an earlier cautionary approach among importers concerned about triggering Japan’s Safeguard tariff. This meant that frozen beef imports in July included substantial amounts of stock held in bond from the previous month before clearing customs, to lower the risk of triggering the country’s Safeguard tariff.


China surges again

For the third successive month, China has surpassed Korea as Australia’s third largest beef export market by volume, adding further weight to the suggestion that a ‘New World Order’ is emerging in international beef trade.

China easily set a new monthly record for imports from Australia, reaching an unprecedented 16,192t for the month. That was up another 8pc from July trade, and a spectacular 930pc rise from August last year, when exports reached only 1572 tonnes. Remarkably, on current monthly figures, China is now within 2000 tonnes of passing the US as Australia’s second largest beef customer.    

This time last year the sleeping giant of China was just beginning to stir as a future beef customer for Australia, with the first glimmers of an appetite for Australian beef beginning to emerge. Who could have foreseen what was about to happen over the succeeding 12 months?

It’s easy to forget just how recent the whole China beef trade phenomenon is.

We’ve dug back into Beef Central’s archives to try to identify when China first started coming on our radar as a serious beef player. We made an incidental, passing reference in an early July (2012) summary of Australia’s 2011-12 fiscal year export performance, remarking that “trade to China for the year was up 8pc to 7736 tonnes,” a truly insignificant amount in the context of where the market has gone since.

It wasn’t until our September 2012 monthly exports report that we really stated to see some encouraging signs, and since then, trade has continued to set volume records virtually every month since.

For the 2013 calendar year-to-date, China has now taken a phenomenal 93,678t of Australian beef, and with four months of the year left, should easily smash the 130,000t mark by year’s end. By this time last calendar year, China had taken just 5700t of Australian beef.

Year-to-date performance ranks it in third place among Australia’s export customers, exceeded only by the US and Japan, and incredibly, almost 10,000t above South Korea’s volume over the same period.

Korea last month took 12,600t of Australian beef, slightly down on July (12,800t), but 15pc better than August 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.


Other markets

For reasons explained above, the Middle East region continues to perform strongly as a customer for Australian beef, taking 6300t during August – an 80pc rise in volume compared with this time last year (3500t). August was down a little on an all-time monthly record in July, associated with the Ramadan religious festival, which reached 6900t.

Year to date beef exports to the Middle East have reached 43,700t, contrasting with just 19,700t for the same period a year earlier.

Total export trade to the EU for August reached about 1900t, down about 10pc on July, but 60pc higher than this time last year. Year to date exports up to August reached 13,000t, compared with 9000t for this period in 2012. Opportunities under the expanded grainfed EU quota have driven growth.

Russia and the former Soviet states took 3500t last month, a 14pc rise over July and a similar amount over August last year. Year to date volume has reached 17,400t.

Among smaller markets, Taiwan took 3337t in August, similar to July; the Philippines 2232t, again similar to July; while Indonesia continues to be badly constricted by trade access woes associated with the country’s self-sufficiency effort, taking 2295t, down from 3400t in July. 




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