October 3, 2013

 

 

Australia's beef exports during September revealed a modest decline compared with the previous month of 2013, but comparisons with September last year reflect the high rates of drought-induced cattle turnoff that have persisted so far throughout 2013.

 

Monthly export statistics released by the Department of Agriculture, Forestry and Fisheries show that total beef exports for September reached 94,923 tonnes, a 3.5% decline from August figures, and well short of the all-time shipment recorded of about 106,000 tonnes set in July.

 

Last month was almost 19% higher in tonnage than September 2012, when producers were still hanging on to cattle on the back-end of two exceptionally good seasons, back-to-back. For January-September this year, total beef export volume has now reached 799,259 tonnes – a record for the first nine months of any year, as compared to the same period of 2012 of more than 100,000 tonnes less, at 693,360 tonnes. That's a jump this year of 15.3%, and one of the biggest turnarounds in export activity seen in recent history.

 

China again featured prominently in September export performance, taking an additional 14,522 tonnes of Australian beef for the month. While that's a little down on August's all time record of 16,192 tonnes, it is still more than three times as much in volume terms as what was seen in September last year of 4,060 tonnes when the brand new trade was just starting to come to life.

 

Year to date, China has now taken a fantastic 108,199 tonnes for the nine months to September, compared with a paltry 9,746 tonnes for the same period in 2012, a rise of 1,010%. China remains well on track to reach Beef Central's earlier prediction that the market could account for 130,000 tonnes of Australian beef this calendar year, coming out of nowhere over the past year. It is now guaranteed of being Australia's third largest export customer in volume terms, behind Japan and the US. 

 

While rates of beef kill recorded across Eastern states remains historically high, averaging 151,300 head per week during September, it might surprise some readers to learn that the number is higher than the weekly average for both July at 149,200 head and August with 148,000 head. That's due primarily to the absence of public holidays during September, rather than any real revived surge in rates of kill.

 

There was an encouraging strong surge in exports to the US during September, where volume reached 19,560 tonnes, a lift of 8.4% over August (18,047 tonnes). That's due to both currency factors, and the decline in cow kill now being experienced across the US, leaving a widening gap for Australian 90CL grinding beef. That's reflected in pricing, with Australian frozen 90CL cow last week making AUD4.26/kilogramme (US$4), up from AUD3.86/kilogramme (US$3.63) this time last year.

 

This time last year when the US was still badly impacted by drought and was killing beef and dairy cow in big numbers, Australian exports were just 17,800 tonnes for the month. Calendar year-to-date, however, the US has taken 156,000 tonnes of Australian beef, an 8.2% drop from the same period a year ago (170,000 tonnes), due mostly to alternate customers like China and the Middle East 'out-gunning' US buyers on price.

 

Exports to Japan during September were more disappointing, reaching 21,766 tonnes, - down 12% from August, and almost as much from year-earlier figures. Mounting export competitive pressure from the US, as a result of this year's age-related protocol adjustment for US beef in Japan, is one cause. The other was an artificially high surge in export volumes to Japan closer to mid-year, caused by an earlier cautionary approach among importers concerned about triggering Japan's Safeguard tariff on frozen beef. Year to date Japan has taken 219,000 tonnes, down from 233,000 tonnes for the same period a year earlier, as US short ribs and other in-demand single cuts continue to flood into the market.

 

Korea last month took 12,700 tonnes of Australian beef, identical to a month earlier, and similar also, to this time last year. While currency movements have helped recent prospects into Korea, Australian trade into Korea continues to struggle under the weight of the lower rate of tariff applied to US beef.

 

Since it signed its Free Trade Agreement with Korea in 2012, the US now enjoys a 5.4% tariff advantage over Australia in exports to Korea, and that figure will expand again by more than 2% from next year. That is reflected in year to Australian year-to-date exports, which have reached 99,487 tonnes through to September 30.

 

The Middle East region continues to perform strongly as a customer for Australian beef, taking 5,300 tonnes during August, almost double exports seen this time last year at 2,762 tonnes. While both August and September were down a little on an all-time monthly record of 6,900 tonnes in July, this spike was associated with the Ramadan religious festival. Year-to-date beef exports to the Middle East have reached 49,000 tonnes, contrasting with just 22,500 tonnes for the same period a year earlier.

 

Total export trade to the EU for September reached 1,870 tonnes, similar to a month earlier, but 25% higher than this time last year. Year-to-date exports up to September reached 14,800 tonnes, compared with 10,000 tonnes for this period in 2012. Opportunities under the expanded grain fed EU quota have driven growth.