January 7, 2013

Australia's 2012 beef exports reach 963,779 tonnes

Australia's 2012 beef exports hit a record, reaching 963,779 tonnes by December 30.

Trade data released by the Department of Agriculture, Forestry and Fisheries on Friday (Jan 4) afternoon revealed total beef and veal exports for 2012 up almost 14,600 tonnes on a year earlier, due largely to stronger second-half performance.

Aided by a strong December monthly shipment period, exports finished the 2012 calendar year on a high note, eclipsing the previous 2008 record of 957,500 tonnes. The strong finish to the year, including a December monthly record volume of 86,229 tonnes, was driven by rapidly deteriorating seasonal conditions, subsequent lower cattle prices and high rates of kill from October onwards.

Australia's beef export trade in 2012 was characterised by a number of key features such as: the re-emergence of the US as a more significant export customer after dramatic declines a year earlier; the further decline in trade into promising second-tier markets like Russia and Indonesia; the continued fragmentation of trade away from the 'big three' (Japan, Korea, US).

While the year was a statistical record in volume terms, the result masked long periods of tough trading conditions for beef exporters, with the Australian dollar averaging almost US$1.04 for the year. Apart from currency, weak consumer demand in Japan and Korea, especially for the first half of the year, and increased supply competition in many markets impacted on export returns, especially for chilled beef. One of the highlights was the relatively strength of manufacturing beef, reaching all time record highs to the US towards year's end.

For the past 10 years, Australian annual beef exports to the US averaged 312,000 tonnes, peaking at a record 398,000 tonnes in 2001, when the Australian dollar was worth aroundUS$0.55 The big recovery in Australian exports to the US in 2012 was largely due to a reduced supply of manufacturing beef in the US, as drought liquidation slowed, record high grinding meat prices (in US¢/pound terms) and reduced manufacturing beef purchases from Russia.

Australia's trade to the US in December reached 21,800 tonnes, up a huge 8,500 tonnes from November, and about 30% higher than December a year earlier. While still easily retaining its mantle as Australia's largest beef customer taking 32% of all beef exported, trade to Japan last year contracted 10% compared with 2011, to 308,500 tonnes. The weak Japanese economy, faltering consumer demand, the high Australian dollar and increased competition from the US all combined to affect Australia's performance in the Japanese market throughout 2012.

Another factor was the widely anticipated jump in competition from the US, following age restriction adjustments on US beef, tipped to occur around April 1. This continues to place downward pressure on demand for Australian beef in Japan, traders say, as stakeholders do not want to get caught with stock bought earlier at what might prove to be higher prices. Australian Trade to Japan during December reached 23,200 tonnes, down about 16% on November shipments, and a massive 23% decline on December trade seen 12 months earlier. After a very slow start to the year, Australian beef exports to Korea finished the year more strongly. Exports for the year totalled 126,000 tonnes - still down 14% on 2011 figures, but considerably better than the position mid-year when exports were down as much as 32%.

Coming out of nowhere during the second half of 2012 as a serious export beef customer was China, which finished 2012 with Australian beef imports totalling 32,906 tonnes. That's up a colossal 324% on 2011 trade (7,754 tonnes) - all the more remarkable given that the surge did not really start until July, after which four consecutive monthly records were set. Somewhat surprisingly, the 2012 trade activity positions China as Australia's sixth largest beef market for the year - bigger than both Indonesia and Russia, and not far behind Taiwan.

An increase in quota access for Australian grain-fed beef contributed to a solid 16% rise in exports to the EU for the last calendar, totalling 14,100 tonnes. That's up from 12,800 tonnes in 2011, and includes an improved December shipment totalling 1,304 tonnes.