Reflecting Tight Supplies, Australia’s July Beef Exports Trend Lower

Australia’s chilled/frozen beef exports slowed again in July, dropping 30 percent year-over-year to 85,300 metric tons (mt), as rainfall added to the tight cattle supply situation. Exports continue to trend back to more “normal” pre-drought levels, which have not been seen since 2012 and early 2013. July exports were significantly lower than a year ago for the United States (19,573 mt, -56 percent), China (8,076 mt, -42 percent), Canada (1,950 mt, -44 percent) and the European Union (1,583 mt, -31 percent) while smaller decreases were recorded for Japan (24,189 mt, -2 percent), Korea (13,968 mt, -7 percent), Taiwan (2,989 mt, -2 percent) and the Philippines (2,670 mt, -5 percent).

Through the first seven months of 2016, Australia’s exports were lower year-over-year to the United States (164,768 mt, -39 percent), Japan (149,185 mt, -10 percent), China (55,709 mt, -32 percent), the Middle East (18,939, -39 percent) and Canada (14,104, -47 percent). Exports trended higher for Korea (99,356 mt, +6 percent), Indonesia (37,841 mt, +85 percent), Taiwan (17,534 mt, +2 percent) and the Philippines (16,624 mt, +32 percent).

For the 2015-2016 marketing year (which ended June 30), Australia shipped a record volume of grain-fed beef – 267,578 mt, up 15 percent year-over-year and slightly higher than the previous record in 2006-2007. Grain-fed beef accounted for 23 percent of Australia’s total exports during this period, assisted by record grain-fed production and a weak Australian dollar. (Total export volume for the 2015-2016 marketing year was 1.17 million mt, down 13 percent from the 2014-15 record. Cattle slaughter was down 14 percent.)

Even with the tariff rate advantages included in the Japan-Australia Economic Partnership Agreement (JAEPA), large inventories and rising Australian prices contributed to a slowing of grain-fed exports to Japan (133,283 mt, -7 percent). On the other hand, grain-fed exports to Korea (31,448 mt, +37 percent) hit a new high, including strong growth in briskets, due in part to the tariff reductions included in the Korea-Australia FTA and tight domestic supplies in Korea. Grain-fed exports to China nearly doubled to 23,950 mt, including brisket and manufacturing beef. Capturing the largest share of the grain-fed duty-free quota, exports to the EU were up 5 percent to 17,402 mt. Australia also exported slightly more grain-fed beef to the U.S. (14,028 mt, +2 percent), while exports slowed to the Middle East (8,514 mt, -8 percent).

Australia’s cattle prices touched another new record this week at A$6.92/kg, up 23 percent year-over-year ($2.38/lb in U.S. dollar terms, +27 percent). The EYCI indicator price remains above the U.S. steer carcass price, although Meat and Livestock Australia’s heavy cattle indicator is a better comparison – those prices are at $118/cwt, live.

Data Sources: Australia’s Department of Agriculture and Meat and Livestock Australia