October beef exports continue to fall throughout the year

Australian beef exports continued to perform poorly in October, reaching just 72,979 tonnes.

Although volume was a slight increase from September trade, up 3.8%, it was off a particularly low base as September beef production struggled in the face of weather challenges and other burdens.

Last month’s exports were down 2% from October last year, which at that time was already heavily affected by livestock shortages.

For the calendar year to the end of October, Australian beef exports have now reached 708,778 tonnes, down 3.7% from the same ten-month period last year.

Barring a miraculous turnaround in the last two months of this year, which seems unlikely, full-year exports for 2022 could struggle to reach 850,000 t. This comes on top of a 36-year record export volume last year of 887,679 t.

Last year, this low volume was mainly due to the shortage of livestock. This year, the reasons are more complex, adding weather disruptions, logistical issues, labor shortages and a still recovering livestock supply to the equation.

Illustrating how slow the second half of the year has been, the MLA’s mid-year projections in July still estimated that total beef export volume this year would reach 940,000t, up 6% on the year. last but largely did not materialize due to weather, labor and supply conditions.

All major export client countries remained under pressure last month.

Despite recent favorable currency movements in October, price competitiveness in world markets remains a big issue for Australian beef.

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.

Largest and most profitable export customer, Japan, took 15,751t from Australia last month, about the same as September, but down about 3,000t or 16% from the same time last year.

For the first ten months of 2022, Japan has now bought nearly 181,000t of Australian beef, down 16,100t or 8% year-on-year.

China ranked second by volume in October exports, accounting for 14,318 t. This was down 4% from the September figures, but 1700t or 13% better than the same time last year.

The recent drop in beef prices in China has apparently pushed more Australian frozen meat to other export markets.

Australia’s volume figures to China do not match huge trade into the country from other beef-exporting nations, including Brazil, Uruguay and the United States. In fact, China is now poised to become the United States’ largest export market, by volume.

So far this year, China has taken 131,649 tonnes of Australian beef, around 80% of it in frozen form. This represents an increase of around 10,000 t or 7% compared to the same period last year, when the country had COVID lockdowns in place for long periods, but a far cry from the volumes shipped during the same period in 2019 and 2020.

United States continued to be a moderate customer for Australian export beef, as it has all year, due to high rates of abandonment of domestic cattle due to drought.

Last month, the volume to the United States reached 13,752 t, significantly more than the unusually low 8,588 t reported the previous month. However, there was an anomaly in the reports that made these numbers somewhat unreliable. Due to the U.S. upgrading its electronic certification system, beef exports for the period September 25-30 were not included in this month’s data, but have been carried over to October .

For the ten-month period in the United States to October 31, the volume reached 107,907 t, down 12% 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.

South Korea trade has now stabilized after some distortions in August and September caused by the Korean government’s decision to temporarily remove beef tariffs as an economic stimulus measure.

After reaching more than 18,360 t in August, the volume fell back to 14,320 t in September and fell again last month to 13,297 t.

Year-to-date, Korea has now purchased 131,297 tonnes of Australian chilled and frozen beef, virtually the same as last year.

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

Indonesia caught 3267 t last month, virtually the same as September (3281 t), but up 26% from October last year. Trade over the past ten months reached 32,930 t, down 20% from the same period a year earlier.