CHINA, for the first time in history, has become Australia’s largest export beef market by volume, surging past traditional big-hitting customers Japan and the United States in trade conducted during July.
The prospect of China assuming the mantle of Australia’s largest beef customer has been looming for much of the past 12 months, with in-month record shipments for the country being set during the earlier stages of 2019.
Last month, China took a record 28,214 tonnes of chilled and frozen Australian beef, about 25 percent higher than the previous month’s record, and twice the size of shipments for the same July period last year, stats released by the Department of Agriculture show. That accounted for almost 25pc of Australia’s total beef export volume last month.
While China has shown dramatic growth in volume over the past six months, there are some specific trade access reasons for the latest spike in trade, discussed in this separate article on Beef Central this morning.
Also helping underpin Chinese demand for Australian beef has been the impact of African Swine Fever on the domestic Chinese pig population, pushing importers and Chinese consumers towards other proteins, including beef; the Chinese government clampdown this year on the illegal grey-trade in beef arriving through neighbouring Vietnam and Hong Kong; and the general increase in demand for beef among middle-class and more affluent Chinese consumers.
For the seven-month calendar year to date, China has now taken 146,244 tonnes of Australian beef, a spectacular 57,000t or 65pc rise on the same period last year. That figure is within a few hundred tonnes of second-placed US market, for year-to-date trade.
Massive surge in overall export beef trade
On the strength of this rampant growth into China, overall Australian beef exports to all markets in July hit 114,965 tonnes, a 15pc surge on the previous month, and in fact the highest level of exports seen since the last major drought turn-off period in 2015, when monthly export volumes surged to 117,000-121,000t during the May-July period.
To put that record 2015 export period into perspective, however, it occurred after a period of significant beef herd build-up across Australia over the previous two years – unlike the current circumstances where herd size has been decimated by drought to a 30-year low of just 26 million head, based on latest figures released by MLA today (see separate story).
Apart from the ‘China factor,’ there appears to be several other influences in play in the sharp rise in overall Australian beef exports to all markets last month.
As reported in our domestic wholesale market wrap several weeks ago (click here to view), the domestic beef market is quite flat, and importers – boosted by an Australian dollar now at four-year lows – have tended to bid product away from the domestic trade since June.
With July 1 being a Monday this year, shipping scheduling may also have been a secondary factor in the startling size of July exports this year, exporters say.
Other key markets have also shown a rising trend in shipments during July.
Japan 4pc higher
Exports to Japan in July reached 27,548t, about 4pc higher than June numbers, but still 2600t or 9pc below shipments seen in July last year. Calendar year to date, volume to Japan has reached just short of 169,000t, about 16,000t or 8pc below the same period last year.
Trade sources suggest stocks held in Japan presently may be quite low, suggesting that Japan may be an active competitor for Australian beef in coming months.
US trade expands
Shipments to the United States in July reached almost 23,700t, up 2pc on June, and much the same as this time last year, as Chinese buyers continue to bid product away from US customers, especially for frozen manufacturing beef.
For the seven months ended July 31, volume to the US has reached 146,630t – about 10,000t or 7pc higher than the previous year, despite the US domestic industry itself continuing to produce high volumes of beef. Manufacturing beef exports to the US are up 12pc year to date, and have shifted to leaner categories, as fattier US trim supplies grow with expanding domestic fed cattle slaughter.
Small rise in South Korea
South Korea accounted for about 14,800t of Australian export beef in July, about 2pc higher than June figures, but 8pc behind this time last year. For the first seven months of 2019, shipments to Korea have reached almost 96,000t, about 4600t or 5pc higher than the same period last year.
In other export markets, Indonesia in July took 5390t of Australian beef, up 1300t or 32pc on June, but about 5pc below July last year First-seven-month 2019 exports have reached almost 33,400t, down about 9pc on the same period last year.
Total trade to the Middle East region reached 3218t in July, up 29pc on the previous month and 54pc higher than July last year. Year-to-date exports to the region have reached almost 18,000t, up 16pc year-on-year.
The high-value European Union market took just 1196t in July, down another 1.6pc on the previous month, while year-to-date volumes reached 8544t, down 9pc on the corresponding period in 2018.