China has again emerged as a surprise packet in terms of growth for Australian beef exports, while there was also a big surge in shipments into the US and North Asian markets, according to October monthly trade figures released on Friday.

The monthly beef and veal shipment total for October reached 94,147 tonnes, leaping 12pc year-on-year, and a massive 18pc rise on September 2012 export trade.

Meat & Livestock Australia cautions, however, that while the big surge in export volumes is positive news, the rise in shipments was underpinned by increasing cattle supplies and lower prices – not a significant improvement in demand or trading conditions.

In fact, there has been very little overall improvement noted in most overseas prices, with the sustained decline in cattle prices enabling Australian product to become more price competitive into many markets.

The October rise is among the largest single-monthly turnarounds seen, apart from the traditional drop-off and recovery in volumes around year’s end.

The latest October figure was the third highest export volume on record, and the largest October level ever seen, according to DAFF trade figures. The all-time record was set back in November, 2006.

October’s export performance tracks recent rises in Australian cattle slaughter rates discussed in Beef Central’s weekly kill summary (see most recent report here).

Calendar year-to-date figures show total Australian exports have now reached 787,500t, about 10,000t or 1.2pc higher than the same period last year.

Looking at individual export market destinations, as pre-empted in trade discussion in the past fortnight, there was another solid rise in grinding beef trade into the US in October, with shipments going past 19,000t.

That’s a further 7.5pc rise on September figures, which were in turn 6.5pc better than August.

In contrast, Australia’s exports to the US in October last year reached just 12,200t, when the US beef and dairy cow liquidation due to drought was in full swing. That means the year-on-year increase in October was up more than 57pc on a year earlier.

Calendar year to date export figures to the US show a similar story.

For January-October this year, exports have totalled 189,000t, contrasting sharply with just 135,000t across the same measure last year.

That’s a colossal 40pc rise, after our trade last year to the US sank to 20-year lows, driven by unfavourable exchange rate, the abundance of domestic US grinding beef available as the US wrestled with the first of two consecutive drought years, and the general decline in beef consumption among US consumers battling tight economic conditions.

While our export performance to the US is yet to return to the heady days when the market took 350,000t of Australian grinding beef a year, the tide has turned. And the US tends to be a much less price-sensitive manufacturing beef buyer than some of the alternatives, like Russia or Indonesia. 

More encouraging growth seen in China

Encouraging signs of trade growth into China seen in September have been repeated in latest monthly data. After decades of expectation and much-discussed potential, the China market is gaining some real traction as a destination for Australian beef exports.

For the month of October, China took 7524t of Australian beef – easily an all-time monthly record. That came on top of a September figure that was already strong (4060t), representing another 85pc increase. Contrast the latest figure with shipments in October last year of just 1058t.

Year to date, China has now taken 17,200t off Australian beef, ranking it seventh among all customer countries, just behind the Philippines (which itself set a new October record of 3650t). The China figure is close to triple the amount sent for the same period in 2011, or to put it another way, a 611pc increase.

Another of the interesting statistics for October is that almost 18,000t of beef went to ‘other’ Asian markets, including destinations like Vietnam, which is typically used as a backdoor ‘grey trade route’ into China.

Exports to the major market of Japan in October reached 24,500t, an 8.5pc rise on the previous month, but still 17pc shy of the volume of traffic shipped in October last year. Year-to-date, Japan has now taken 258,000t, about 7pc down on 2011. That’s due mostly to ongoing weak consumer sentiment and increased competition continuing to place downward pressure on demand for Australian beef. 

Trade to South Korea reached 14,683t, a 25pc improvement over very flat trade in September, and almost 20pc better than this time last year. Trade sources said the kick in exports for the month can be largely attributed to specific cut shortages, uncertainty around US beef supplies and advanced preparations for Lunar Year celebrations in January.

The EU market was another destination showing solid growth last month, reaching 2500t for October, close to double September’s 1200t, and 1100t in October 2011.

Exports to the Middle East (3079t) were the largest monthly volume so far in 2012, with shipments increasing 15pc year-on-year.

On the other side of the ledger, Russia continued to disappoint as an emerging customer. The former Soviet States accounted for just 2500t in October, down from 2700t in September and 4400t in October last year, as Brazil continues to lift trade from Australia, based on currency movements and market access improvement. Total trade to Russia this calendar year has reached 32,000t, down from almost 51,000t a year ago, as South American competitive pressure mounts. 

Other markets to fall in volume in October included Taiwan (3100t) and Indonesia (2594t) dropping 12pc and 41pc year-on-year, respectively. Trade with Indonesia continued to be hampered by import permit restrictions linked to the Indonesian Government’s self-sufficiency drive, with October trade limited to 2600t, little more than half the amount of trade this time last year.

Accentuating the current high supply and lower price driven surge in exports has been a high A$, which in recent years has seen Australian red meat become less competitively priced when combined with the higher livestock prices in late 2010 and throughout 2011.

State of origin shows dominant Qld position

State-by-state export statistics for October clearly demonstrate the sheer dominance of Queensland as a source for export beef.

Queensland processors accounted for 67,111 tonnes of export beef during October, from a national total of 83,823t. That’s more than 71pc of all export beef for the month, with the next largest state, NSW, accounting for 16pc, and Victoria, 14pc.

While Queensland’s beef herd accounts for about 45pc of the national total, the export beef figures are enhanced somewhat by:

• Export processors statewide sourcing livestock, either directly or indirectly, out of the eastern half of the Northern Territory, and
• large processors in the state’s southeast corner sourcing livestock from across the NSW border.