Australia’s chilled/frozen beef exports jumped back above 100,000 metric tons (mt) in May, the largest of 2016, but May volume (100,579 mt) was still 14 percent lower year-over-year. For January through May, exports totaled 432,852 mt – down 18 percent from a year ago but still up 5 percent from the same period in 2013. Chilled beef exports were 119,385 mt, down 9 percent on smaller volumes to the U.S. and the Middle East, as well as the top market, Japan.

Individual market highlights for Australian beef exports (January through May) include:

• Shipments to the U.S. returned to 2014 levels at 121,931 mt, dropping by one-third from last year’s surge.
• Exports to Japan were down 14 percent to 100,476 mt, a multi-year low, with chilled exports down 9 percent to 48,095 mt.
• Australian grass-fed beef is facing stiff competition from Brazil in China (39,528 mt, -28 percent) and the Middle East (14,935 mt, -33 percent), after Brazil regained access to China last summer and to Saudi Arabia in February.
• Exports to South Korea were up 12 percent to 69,973 mt, with chilled exports up 16 percent to 14,309 mt as Australian beef is also benefiting from Korea’s high domestic prices.

Australia’s cattle on feed numbers have dropped below year-ago levels (914,900 head, -5 percent in the January-March quarter), and cattle feeding margins are now reportedly negative due to high feeder cattle prices and an uptick in feed costs. This could limit Australia’s grain-fed exports in the coming months. For the first quarter, grain-fed exports were up 3 percent, totaling 62,282 mt, with exports to Japan down 18 percent (29,208 mt) but significantly larger for Korea (13,187 mt, +63 percent) and for China (5,154 mt).

The overall slowdown in Australia’s exports is in line with the drop in production, as it slowly returns to historic levels. Recent rainfall has limited kills and strengthened cattle prices, which could have further upward potential per the winter seasonal trend. Australia’s first quarter beef production was down 17 percent at 532,638 mt, with slaughter down 19 percent to 1.82 million head. Heavier carcasses (289.2 kg, +2 percent) resulted from more fed cattle in the mix and fewer females.

The Australian dollar bottomed in January at just under 70 cents. It strengthened to 78 cents by mid-April, but eased back to 72 cents by late May and early June (compared to about 77 cents a year ago). So the weaker Australian dollar will continue to partially offset strong cattle and beef prices, bolstering exports. Australia’s cattle prices continue to rebound, ending this week at A$5.96/kg, the highest since early March and up 24 percent year-over-year. In U.S. dollars, prices were up 20 percent to $2.00/lb.