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Strong July Beef Exports for Australia, but Results Mixed in Key Markets

Australian-Exports

Australia’s chilled/frozen beef exports were record large in July, increasing 14 percent from a year ago to 121,524 metric tons (mt), as drought conditions continue to push cattle to slaughter. While the temporary increase in Australian beef production continues, they have been able to help meet demand in other markets with tight supplies. Exports to the United States (36,567 mt, +110 percent) more than doubled from a year ago, largely in response to record-high prices for U.S. 90 CL. July exports to Canada nearly doubled (3,471 mt, +97 percent) and exports to Indonesia (5,919 mt, +75 percent) were also sharply higher. For January through July, exports to these three markets increased significantly year-over-year: United States: 189,476 mt, +61 percent; Canada: 18,581 mt, +126 percent; Indonesia: 33,151 mt, +77 percent.

July exports to China (10,949 mt, -27 percent) were below 2013 levels for the third consecutive month, following enforcement of China’s hormone-free requirements. Despite large volumes early in the year, January-July exports to China were just 2 percent higher than a year ago at 78,978 mt. Although still small, July exports to Hong Kong increased dramatically (2,549 mt, +340 percent), pushing the January-July total to 6,855 mt (+151 percent).

July exports to Japan were down 17 percent from a year ago to 26,284 mt, although this was in comparison to very large volumes in July 2013. So Australia’s July exports to Japan were actually higher than in June and steady with May results. For January through July, exports to Japan were down 8 percent to 158,359 mt as U.S. beef continues to regain market share.

As another sign of the drought and tight cattle supplies overseas, Australia’s live cattle exports were also record-large in the first half of the year. Exports of 633,343 head were up 82 percent from last year with a near doubling to Indonesia (348,753 head), a six-fold increase to Vietnam (78,842 head), and a 90 percent increase for China (58,321 head, mostly dairy cattle). Israel, Russia, and Malaysia rounded out the top six destinations, all with double-digit increases.

Meat & Livestock Australia (MLA) estimates Australia’s cattle herd at 26.7 million head, down 9 percent from a year ago. By July 2015, the cattle herd is projected to fall to 26 million head, a 20-year low. With weather as the primary variable, the herd is expected to rebound to 28 million head by 2020, but this would still be 1.2 million head lower than the 2013 peak.

Australia’s 2013-14 beef production was a record 2.46 million mt, up 10 percent, with 8.76 million head slaughtered, up 12 percent from the previous year, and up 16 percent from the five year average. Female slaughter increased by 21 percent to 4.29 million head, accounting for about 50 percent of production, and indicating the difficulty for producers to retain breeding stock. Cattle-on-feed have also increased due to poor pasture conditions. MLA’s forecast for 2014 beef production is nearly steady with last year. Meeting this projection would require a significant slowdown in slaughter during the second half of the year, but this will depend on rainfall. In 2015, a 9 percent decline in beef production is projected, with a corresponding decrease in beef exports.

Sources: Australia Department of Agriculture, Fisheries and Forestry, Australian Bureau of Statistics, Beef Central