Australia’s beef exports remained red-hot in February, as drought-induced herd liquidation produced large quantities and plants typically shuttered this time of year due to the rainy season were in full operation throughout the month.

February chilled/frozen exports totaled 100,031 mt, up 24 percent from a year ago and the largest monthly volume since October. The United States (23,453 mt, +38 percent) was the largest destination, reflecting sky-high U.S. prices for 90CL (lean manufacturing beef). The weak Australian dollar, which is down 15 percent from a year ago against the U.S. dollar, also contributed to this growth, and filled a void in U.S. supplies as U.S. cow slaughter was down 8 percent year-over-year. Further illustrating tight North America supplies, Australia’s February exports to Canada (3,153 mt, +194 percent) nearly tripled from a year ago.

Exports to No. 2 destination Japan were up 5 percent to 22,159 mt, including 9,873 mt of chilled beef (+6 percent).

China (13,183 mt, +11 percent) continues to edge out South Korea as Australia’s third-largest market, although China took no chilled beef (1,705 mt were imported in February 2013) again last month as its ban on Australian chilled beef continues. Australian trade publication Beef Central also notes that 14 percent of Australia’s export volume to China still enters the country in frozen carcass form, providing work for China’s boning operations that are struggling to source local domestic beef. At its peak last year, this ratio was about 20 percent.

February exports to Korea were up nearly one-third (12,333 mt, +32 percent), although the increased in chilled beef (2,486 mt, +3 percent) was much more modest. Exports to Indonesia surged (6,072 mt, +192 percent) as Australia continues to capitalize on Indonesia’s recently-relaxed import license requirements.

The European Union (1,951 mt, +80 percent) was a growth market again in February. Chilled product (1,867 mt, +82 percent) made up most of the volume as Australia continued to grow its shipments under the grain-fed, duty-free quota. Exports to the Middle East (5,040 mt, -8 percent) trended lower but chilled volumes (1,710 mt, +20 percent) were still strong, reflecting growth to Saudi Arabia and the United Arab Emirates. Exports were sharply lower to Russia (403 mt, -70 percent) following Russia’s recent ban on trenbolone.

Australia’s February cattle indicator price remained 11 percent lower than a year ago in U.S. dollar terms, although the weaker currency accounts for much of this decline. Australia’s cattle slaughter remains inflated and there are growing concerns about tight beef supplies in the longer term, following nearly two years of significant herd liquidation. ABARES projects cattle slaughter for the current marketing year (July 2013- June 2014) to finish 8.5 percent above last year’s total. Correspondingly, the herd is expected to fall to 27.1 million head – the lowest since 2009-2010, a year that was also impacted by drought. After record exports this year – expected to be up another 10 percent – ABARES projects a 7 percent decline in 2014-2015 as producers begin to rebuild herds. But this will depend on rainfall, which is not currently in the forecast for Queensland.

Sources: Australia’s Department of Agriculture, Fisheries and Forestry (DAFF) and Bureau of Agricultural and Resource Economics and Sciences (ABARES) and World Beef Report