October 26, 2012

Rising competition from other markets and tight beef supply in North America have caused inflation and increased beef import demand from Canada in recent months.

Indicative cow meat prices are 10% above the corresponding period last year, while Canadian grinding beef imports for the first nine months of the year tracked 20% above year ago levels.

Picking up on the growth in demand for imported beef, total Australian beef exports to Canada for the first nine months of 2012 were 52% higher on-year and 37% above the five-year average, totalling 9,618 tonnes, driven largely by a 96% jump in manufacturing beef trade. Interestingly, in 2002 Canada was Australia's fourth largest export market, taking 82,926 tonnes. However, exports to Canada have averaged below 10,000 tonnes since 2003, largely due to the trade fallout from positive BSE tests across North America. Additionally, the strength of the Canadian dollar in recent years, combined with the availability of US beef, saw Canadian importers sourcing more beef from the US.

Providing support for Australian beef exports to Canada during the short term is the expectation that tight Canadian cow meat supplies will continue. Weekly cow slaughter has fallen to its lowest point since 2004, as weekly cow slaughter for the past six weeks averaged 4,991 head, 56% below the five-year average. Excellent forage supplies and record high cattle prices in North America have reportedly caused producers to retain more heifers for herd rebuilding.