Given the dizzying statistics coming out of recent weekly Eastern States slaughter reports, it should come as no great surprise – but Australia’s October beef exports have set yet another all-time monthly record for volume.
Data released by DAFF this morning shows our beef exports to all markets for the month reached 122,455 tonnes, a further 4000t higher than the previous record set in September.
To put these figures into context, Australia had not previously exported more than 100,000 tonnes of beef in a single month until the current extended drought event started to take hold last year.
The recent drought-fuelled surge in exports means that Australia will easily set another all-time calendar year record for exports by December 30. Already this year, January-October shipments have reached an incredible 1.059 million tonnes.
Compare this with the same ten-month period last year (903,000t), and the level of exports is some 156,000t, or 17pc higher, this cycle.
In fact the average total annual export for the five years prior to this one (2009-13) was just 972,000t.
Barring widespread rain, at current rates of slaughter it appears that the 2014 annual total could easily exceed 1.2 million tonnes, or close to 24 percent above that five-year average.
The tragic part of that is that the biggest proportion of the increase has come from cow meat, as producers across Eastern Australia have been forced to sell-down their breeding stock in response to parched paddock conditions, and little immediate prospect of rain.
If there is any consolation to be taken out of the sad events of this year, it is perhaps how much worse things might have been, cattle price wise, without the unprecedented strength seen in the US grinding beef market, ably supported by export customer newcomers like China.
It is widely conceded that cattle prices in 2014 would have been an absolute bloodbath without that extraordinary demand support, coupled with a lower Australian dollar to help drive demand and underpin prices. The A$ today at US87.5c, is a full US6c below where it sat this time a year ago.
Again it was the resurgent grinding beef market into the US which provided deep buying support in October, exceeding 40,000 tonnes for the second consecutive month, despite the seasonal return of New Zealand as a grinding meat export competitor.
Australian exports to the US in October hit 42,705t, on top of 47,000t the month before (an all-time record for any month). These two months were easily the biggest volumes Australia has sent to the US since 2005.
October’s shipments to the US were close to double that seen this time last year (21,481t).
Calendar year to date, exports have reached 317,985t, up by an extraordinary 140,000t on the same period last year. At current rates of trade, volume to the US could easily hit 350,000t, a figure not seen since 2004. Just three years ago, as the US was liquidating its own herd, full year exports reached just 168,000t.
A considerable proportion of Australia’s export ‘surplus’ this year has been diverted into an increasingly desperate US market, after four very quiet trading years. Already by the end of August, year-to-date beef exports to the US had exceeded trade in the whole of 2013.
According to the most recent USDA World Agriculture Supply and Demand Estimates, US beef supplies are forecast to remain tight for the duration of 2015. Taking this into consideration, Australian red meat exports to the US are likely to remain high for the remainder of the year and again next year, with the only constraint likely to be tighter supplies in Australia.
Other markets mixed
A basket of other mature and emerging export markets also took larger volumes of Australian beef last month.
Volumes to Japan reached 28,000t, up 5pc from the previous month, and +31pc on October last year, partly due to less competition out of the US and currency movements. Year-to-date, Japan has now taken 240,000t of Australian beef, virtually identical to the same period last year.
Korea is re-asserting its historic position as Australia’s third largest export market ahead of China, responsible for 13,500t of chilled and frozen Australian beef in October, up 18pc from the month before and about the same as this time a year ago. Year-to-date exports have reached 123,000t, up about 10,000t on the 2013 YTD figure.
China slowdown continues
The slowing in trade momentum to China seen this year has continued, with October trade reaching 9000t, on top of a similar figure the month before. This time a year ago, October exports to China were close to 17,000t.
Calendar year to date tells a similar story. Total exports for the first ten months of 2014 have reached 106,000t, down 25pc on the same period last year (125,000t), as other markets out-compete China on price. US grinding meat prices for imported 90CL, which occupy the same space as many Chinese customers, have risen a dizzying 68pc compared with this time last year. The US is effectively bidding Australian product away from a more price-sensitive Chinese buyers.
The suspension followed by partial re-opening in chilled trade hasn’t helped, with just 800t of chilled meat shipped in October. Carcase and bone-in product again accounted for about one third of October exports.
Elsewhere around the world, October trade results were mixed.
Predictably, following retaliatory actions put in place against Russian president Vladimir Putin, exports to Russia (CIS, former Soviet states) have all but disappeared, accounting for just 75t of frozen product last month. This time a year ago, the volume was 4700t. Year-to-date trade has collapsed to just over 2000t – representing just 8pc of shipment volumes for the same period last year.
Trade into the EU remained strong in October, reaching 2050t, up 10pc on a month earlier, and much the same as last year. YTD trade to the EU has reached 20,800t, up 20pc or 4000t on a year earlier.
With the Muslim Eid religious festival just finished, trade into the Middle East remained strong last month, reaching 4500t, while year-to-date volume at 51,500t was down slightly on 2013 figures.
There was a big jump in trade to Indonesia in October, reaching 5900t, up 40pc on September, but similar to this time last year. Year-to-date, beef exports to Indo have reached leapt 62pc to 46,500t, from 28,700t a year ago, when self-sufficiency-driven quotas were still curtailing trade.
Other Asian markets saw Taiwan take 2700t in October, and the Philippines 4700t.
Article should also quote the actual $ value of beef prices paid to producers. In comparison to the Dizzing 68% extra beef that processors are selling at highest prices ever to their overseas customers. Now that would be an interesting article.
Obviously difficult, if not impossible for us to obtain such information on a weekly basis, Jacqui, but there are indicators out there that might provide guidance. Editor