November 21, 2007

 

South Korea pulls up Australian beef exports on near record levels

 

 

Australian beef exports are again reaching record levels on South Korea's increased demand as well as its suspension of US imports due to a recent discovery of a banned material found in its shipments.

 

Peter Weeks, chief market analyst for Meat & Livestock Australia, said the South Korea's halting of US beef imports have escalated demand for Australian beef in the last four to six weeks.

 

Australian beef exports to Korea in October jumped by 28 percent from the previous month to 13,293 tonnes. Further gains are seen for November.

 

For the first 10 months of the year, Australian exports to Korea have hit 115,400 tonnes, which is close to the record of 116,200 tonnes for all of last year.

 

Weeks expects these shipments will be surpassed in the last two months of the year.

 

Korea is seen to reach its annual peak demand for beef next month, as the weather turns cold and the festive December and January season nears.

 

The period of South Korea's ceasing of US beef imports is still uncertain but indications are there will be no agreement before early next year.

 

Seoul last month halted imports of US beef after finding banned spinal material in a shipment. This followed a resumption of imports in April after bans in 2003 because of mad cow disease outbreak.

 

Australia's beef exports to its two biggest markets, Japan and the United States, are also running well. Japan has also strictly implemented entry of US beef from cows up to 21 months of age due to mad cow disease. Weeks said the effective age limit is more like up to 17 months because of the way the trade is policed.

 

US shipments have peaked at around 4,000 tonnes a month and seem unlikely to increase above that before the peak demand period in April and May next year, Weeks said.

 

That is only 15 percent of their previous supply in 2003. Meanwhile, Australia has an 82 percent share of the Japanese import market, only slightly down from 88 percent last year.

 

After US beef regained access to Japan in June 2006 after an initial ban in December 2003 and a second ban in December 2005, Australian beef shipments to Japan have been down by 5 percent, to 314,500 tonnes.

 

Australian shipments to its second-largest export market, the United States, started well this year but were hit by the US economic downturn triggered by high fuel prices and the mortgage crisis. Exports are now 3 percent higher for the year at 256,500 tonnes, against 249,200 tonnes.

 

Next year looks tougher, Weeks said, as US beef exports are set for a rebound next year, including increased shipments to North Asia.

 

Australia's beef industry will also have domestic problems, particularly on currency which is expected to fall despite touching a 23-year high, he said.

 

Australian grain prices, which recently hit all-time record highs because of Australia's worst drought in 100 years, would also have to come down.

 

Australia is the biggest beef exporter in the world by value, selling around A$4.6 billion a year on world markets. In 2006 exports to Japan were worth A$2.23 billion, to the United States A$1.21 billion, and to Korea A$800 million.

 

US$1 = A$1.1276 (as of November 20, 2007)