July 18, 2007

Australian exporters optimistic on beef exports to South Korea and Japan

Despite the easing of restrictions of US beef in Japan and South Korea, Australian beef exporters are expecting a pick-up in Australian beef exports to the two countries in August and September.

Peter Weeks, chief analyst at marketing concern Meat & Livestock Australia Ltd (MLA), said beef buyers in Japan and South Korea are delaying purchasing large amounts of Australian beef in the hope that US product will start entering both nations in bigger quantities. This expectation has put downward pressure on prices, he said.

Although there has been some pickup in demand, the big rush would be in August and early September when they realize US beef may not be coming back in large quantities so soon, said Weeks.

Weeks said North Asian importers can only hold off buying for so long. If the expected large shipments of US beef do not start arriving in the next month or two, they would have to start moving on Australian product. Weeks said he does not believe there would be an influx of American beef into these markets anytime before September as negotiations would likely take a longer period to complete. 

This is particularly true in South Korea, where the quantity of US beef imports remains small and is unlikely to be able to satisfy the peak demand in August and September. The US and South Korea still have to hold long discussions covering bone-in product, Weeks noted.

As for Japan, beef prices there are also under downward pressure in anticipation of more US product landing, rather than reacting to actual shipments, he said.

If large US beef shipments do not materialise, Japanese imports of Australian beef likely will pick up in the coming months ahead of the peak period from November through January, he said.

Although importers in Japan and Korea believe the entry of American beef would bring down beef prices, they would also have to recognize that the global meat scene has changed since 2003, with higher costs for feedgrain and droughts driving up prices, Weeks pointed out.

Australian exports to Japan for the first half of the year was down 1.3 percent on-year whereas that to South Korea was up 12 percent. Overall beef exports was up 4.5 percent on-year.