AUSTRALIA’S July beef export volume has hit an all-time monthly record – and its happened while kill numbers are around 30,000 head per week less than when the previous record was set back in the 2015 drought period.

Shipments to all offshore markets last month hit an incredible 129,998 tonnes, up 22 percent or 24,000t on the previous month of June, and 34pc higher than July last year.

The new record is around 5pc higher than the previous monthly record set back in March 2015 when 123,464t was shipped. Almost 75pc of that previous record was in frozen form, signalling high rate of cow slaughter at the time.

While there was some extremely large export activity recorded during the 1974-78 beef slump period, individual monthly records do not trace back that far, with the current monthly dataset extending back to 1994.

For the current calendar year to date, Australian export beef shipments are now at 731,408t, about 27pc higher than the same seven months last year. The seven-month year-to-date record was set back in 2015, when January-July exports reached 768,253t, indicating just how recent the latest trade surge has been. During the 2015 drought, slaughter and export volumes remained consistently high right throughout the first half of the year.

While this year’s June monthly volumes were reasonably strong at 106,000t, there was no clear signal that tonnage would explode the way it has during July.

Another all-time record was set for grainfed beef exports last month, with a total of 36,976t easily surpassing the previous grainfed high set a month earlier. That clearly reflects the gradual encroachment of grainfed finishing systems in Australian beef production over the past ten years.

See a breakdown further below on individual export market performance for July, and year to date.

Unusual feature

The unusual feature about the July record export tonnage is that it has been achieved at slaughter levels way below the beef industry’s record highs.

July national adult cattle slaughter volumes have been reasonably steady at around 140,000 head per week. Compare this with the 2015 drought turnoff period, when weekly kills were often in the +170,000 head range, and at time drifted into the 180s.

So how was the July record achieved, with kills so much lower?

Inquiries suggest there may be a string of factors in play. Some combination of the points raised below is likely responsible:

Carcase weights: Adult cattle slaughter weights are current around 315kg, up from 280kg (+35kf or 12.5pc) from where they sat during the 2015 drought turnoff period. Further adoption of lotfeeding since 2015 has also contributed to heavier carcase weights.

Displacement out of domestic market: Domestic beef wholesalers say demand is currently quite flat for beef in the Australian domestic market, and especially the food service channel, due to tight economic conditions and cost of living pressures. That appears to have caused some displacement of beef during July out of domestic into export channels. More will be learned on this early next week, when domestic beef trade data is released.

For interest, the record for Australian beef exports as a percentage of total beef production happened during the 2019 drought turnoff period, when in the fourth quarter exports reached 79pc of all beef production, in carcase weight terms. The proportion typically drifts between around 70pc and 75pc.

Stock carry-over from June: Anecdotally, some exporters experienced logistics difficulties during June (container access and other problems) that may have seen some volume held over to be recorded as July shipments. Some stock buildup in cold storage was also evident during June. New financial year accounting may have also played a minor part.

Southern slaughter remains higher: In a typical year, southern states show a distinct decline in mid-winter processing numbers, but that has been much less evident this year – partly because many southern processors are currently sourcing slaughter stock in large numbers out of areas much further north, into all parts of Queensland and Central Australia.

Currency movements: Key North Asian beef importing markets like Japan and Korea have been hit hard by unfavourable currency movements this year, against both the US$ and the A$. That started to change sharply around 10 July, and may have motivated some customers to re-enter the market with some vigour as the month progressed. See separate story to come on this topic later this week.

Declining export availability out of the US: There’s evidently been some displacement of US exports by Australian, as the US beef system starts to struggle under the weight of a beef herd now at its lowest level since 1951.

Almost all markets sharply higher in volume

With the exception of Japan, every significant Australian beef export market was sharply higher in volume in July, compared with the previous month and the same time last year.

The United States continues to shine as the standout export customer, in sheer volume terms, taking an incredible 38,540t in July, up another 34pc on June volume, and 61pc higher than July last year.

Once again, the trend clearly reflects the point that when the US needs beef, it has the ability and determination to bid imported product away from all of Australia’s other export customers.

Calendar year to date, the US has now taken almost 194,000t of Aussie beef, up 72pc on the same seven-month period last year.

While these numbers are impressive, history shows the all-time peak in Australia’s monthly exports to the US came in September 2014 (drought period here, combined with beef shortage in the US), when we loaded an incredible 47,238t of beef into the market in just 30 days. The previous time when monthly exports were as high as last month was September 2015. Keep in mind this was well before the dawn of the China export market era, meaning there were less competitors in play for Australian product.

Equally significantly, exports to Japan last month continued to surge, reaching 26,297t, up 48pc on the same month last year. Year to date, our exports to Japan have now reached 160,207t, up 33pc on last year.

A big part of that trend is the gradual decline in exports to Japan out of the US, now being displaced more by Australian product.

A similar ‘displacement’ story applies in South Korea, where tonnage shipped last month reached a recent high of 20,331t. That was up 26pc on the previous month, and 20pc on July last year.

For the seven months year-to-date, volume to South Korea has reached just short of 110,000t, up 5pc on last year (large domestic Hanwoo cattle slaughter has had some moderating impact on this relatively small growth).

China has been regarded as a challenging export market so far this year due to local economic challenges limiting demand, but Australia’s July exports at 16,249t still showed a marked 23pc rise on the previous month, while still 3pc behind this time last year. Similarly, year-to-date statistics show trade at just over 106,000t, still 8pc lower than last year for the same period.

Secondary and emerging markets followed a very similar trend in July to the ‘big four.’

Shipments to Indonesia last month were up a startling 30pc over June to 6940t, while year-to-date volume at 40,459t has been 6pc higher than last year.

Smaller markets like Taiwan (+37pc to 3541t), the Philippines (+40pc to 3316t), Canada (+32pc to 2214t), Thailand (+52pc to 1865t) and Vietnam (+30pc to 2718t) all followed a consistent trend higher, between June and July this year.

Start of a new cycle?

Some analysts are picking Australia’s July export results as the most powerful evidence yet of the ‘start of a new global trade cycle’, with US rates of slaughter now starting to decline, putting US beef exports under pressure.

That’s being reflected not only in Australia’s increased tonnage into the US, but also indirectly via much larger Australian volumes into customer countries that are normally serviced by both Australia and the US.

Cow and bull (non fed) kill is now down sharply in the US, and will continue in this direction for at least the next 12-18 months, trade watchers anticipate. And at the same time America’s own consumer demand for beef remains relatively strong.

While they may not continue to break monthly records, it’s anticipated that Australian beef export volumes will continue to remain very strong for the remainder of 2024, and into 2025.

Some analysts are already taking all-time record shipment volume for calendar 2024, where 2019’s tonnage of 1.23 million tonnes was the highest seen since the 1970s Beef Slump era.

Already, using rolling 12-month data (July 2023 to June 2024), Australian exports are higher than the same 12-month period in 2018-19.

While dwelling on milestones like those listed above, it’s worth remembering that as recently as 2022, Australian beef exports hit a 19-year low, falling to just 854,000t as the industry moved into herd rebuilding phase following drought. That’s a crazy 400,000t less than what Australia looks like exporting for calendar 2024.