Australian beef exports to Russia during May reached their highest level seen since September last year, totalling almost 5200 tonnes –  partly at the expense of trade out of Brazil.

Australian shipments to Russia in May were up 15pc on the previous month, an encouraging sign given the particularly sluggish start to the year. Overall exports for the five months from January to May were 32pc below the same period in 2011, at just 16,943t. But indications are that trade is now returning to more normal patterns.  

Shipments last month remain dominated by frozen product used for further processing and manufacturing, accounting for 98pc of our exports. Silverside/outside dominated the shipping manifest, accounting for 31pc of volume, followed by manufacturing meat at 23pc.

There has been a significant shift in the composition in exports to Russia so far in 2012, with silverside/outside being the most highly sought-after cut, making up 33pc of year-to-date shipments, while manufacturing meat accounted for 19pc. In contrast, during the same five months of 2011, manufacturing meats accounted for 46pc of shipments, with silverside/outside only 17pc.

The composition of trade last year was clearly driven by one factor: the dramatic decline in trade (mostly grinding meat) out of Australia to the US last year. Total exports to the US in 2011 reached only 168,000t, little more than half earlier volumes.

However the higher prices and larger quantities of manufacturing beef being sent to the US this year, coupled with sluggish demand at the start of the year out of Russia, have contributed to a decrease in manufacturing segment exports to Russia.

While Brazil’s beef exports this year have shown a dramatic increase, largely on the back of currency movements and larger cattle turnoff, that trend is not reflected in Brazil’s trade into Russia.

Overall Brazilian beef exports increased 30pc year-on-year in May, to 83,000t. After a sluggish start to the year, the country’s beef exports for the first five months of 2012 are now 3.1pc above year ago levels, at 339,000t.

Although Russia is historically Brazil’s largest beef export market, that relationship is not reflected in trade between the two countries so far in 2012. In June last year, Russia placed a ban on a number of Brazilian beef processing plants which has limited the amount of Brazilian beef eligible to access the Russian market, constraining export growth.

An increase in Brazilian exports to other markets has helped to compensate for this, including Chile, Hong Kong and Egypt. 

The Brazilian real decreased 18.4pc year-on-year to the end of May, falling from a high of US62¢ in May last year to close to US50¢ in recent weeks. That movement has come at an opportune time for Brazilian beef exporters, as supplies have increased with the onset of the dry season. The increased supplies have also been reflected in the physical market, with the Sao Paulo cattle market index decreasing from $US3.25/kg in January, to $US3.04/kg by mid-June.