Australian beef exports in September continue to struggle for a year

AUSTRALIA’s beef exports to all markets fell sharply in September, under the cumulative effect of processing delays caused by wet weather logistics problems, persistent labor shortages and scarcity under underlying beef cattle population due to herds resuming after the drought.

The unique national public holiday marking the death of Queen Elizabeth also deprived September of an extra day of treatment operations this year.

The result was an export tally to all markets of just 70,295 tonnes, down around 12,000t or 13% from the previous month, and one of the lowest monthly volumes of the whole year. . The volume was down almost 9600 t or 12% in September last year.

Another contributing factor was the slowdown in exports to South Korea last month, after a near-record tonnage in August caused by a unique tariff opportunity offered by the Korean government.

Beef exports to Korea in August reached 18,368t, up 42% from the same period a year earlier, due to Korea’s earlier decision to suspend tariffs on 100,000t imported beef. The move was part of a government effort to fight rising inflation in order to bring down the prices of basic commodities, including beef.

Australia currently faces a 16% tariff on exports to South Korea, while its main competitor, the United States (through its previous free trade agreement), pays a 10% tariff. .6%. The temporary removal of the tariff therefore created a disproportionate tariff advantage for Australian exporters.

As a result, Australian exports to Korea surged in August, but returned to more conventional levels last month. The frozen beef component of the 100,000t “quota leave” filled up quickly, while the refrigeration/manufacturing quota component was expected to be exhausted before the end of September.

Year-to-date, Korea has now purchased exactly 118,000 tonnes of Australian chilled and frozen beef, a slight increase from the same period last year.

All export markets remain weak

Year to date, Australian exports to all markets reached 635,799 t, down 4% from the same period last year.

It now looks increasingly unlikely that Australia’s full-year beef exports will hit 900,000t again this year – after 2021 hit a three-decade low of just 887,679t.

Despite recent currency swings, price competitiveness in global markets remains a big issue for Australian beef, with volumes held in cold storage on the rise again.

Other major export destinations for Australian beef also mirrored last month’s downward trend.

Largest and most profitable export customer, Japancaught 15,791 t last month, down 6,200 t or 28% in August, and 26% less than September last year.

For the first nine months of 2022, Japan has now taken almost 165,000t of Australian beef, down 6% from the same period last year.

In addition to our own production challenges, there is currently an abundance of American grain-fed beef ending up in global beef markets like Japan and Korea – at very competitive prices, due to major herd liquidation due drought in the United States.

China took second place in the ranking of export volumes in September at 14,917 t, down 11% or 1880 t in August, and 20% less than the same period last year.

China has been particularly active in beef imports this year, with July shipments from all countries reaching an all-time high of 270,038 t, 42% more than in July last year. However, almost all of this massive growth came from South American supply. In August, Australia accounted for just 6% of China’s beef imports, due to price competitiveness concerns.

So far this year, China has taken in just over 117,000 tonnes of Australian beef, around 80% of it in frozen form. This is an increase of around 7% or 8200t on the same period last year, when the country also had COVID lockdowns in place for long periods, but a far cry from the volumes shipped during the same period in 2019 and 2020.

Australia is increasingly marginalized in the Chinese market due to cheaper products from South America and higher volume shipped from the United States.

Given the extremely high rates of beef being killed in the United States at present due to drought, it is hardly surprising that Australian beef exports to United States East and West Coast Ports remains weak in September.

Nine-month trade to the US through September 30 was just 94,155t, down 14,000t or 13% from last year. Given the close trade ties between Australia and the United States, which for decades have seen an annual trade volume of over 250,000 t and often well over 300,000 t, this year’s figure is remarkably low.

Last month, the volume to the United States reached only 8588 t, down 43% or 6400 t from the previous month. It was one of the smallest monthly shipments to the United States this year.

In smaller and emerging export markets, the pattern of trade was similar.

Indonesia caught 3281 t, down 28 pc or 1300 t from August, and 21 pc behind this time last year. Trade over the past nine months reached 29,663 t, down 19% from the same period a year earlier.

The seven countries combined Middle East Region accounted for 2,689 t of our beef last month, 20% less than August and 10% less than September of last year. Year-to-date figures showed trade of 21,395t, down 6% from the previous year.

With no functioning free trade deal with the UK or EU until at least next year, Australian trade in the region continues to trickle down.

Volume in the UK market last month only reached 101 t, while the total for the year was 620 t.

The enlarged EU since BREXIT did not hold up much better. Last month the total was 435t, down 6% from the previous month, while total shipments to the EU since January 1 reached 5,883t.

Russian mystery

One of the curiosities of the 2022 cumulative export statistics compiled by DAF is the nine tonnes of chilled boneless Australian beef recently exported to the CIS (Russia). Australia hasn’t sold beef to Russia for years, and certainly not since the invasion of Ukraine.

The use of the embassy was a possible explanation provided by a trade observer, but the volume seems too high for that. Any suggestions from export readers are welcome via the comments panel below.