December 3, 2014

 

Australia's November beef exports slip but ...

 

 

Australia's beef exports in November slid to 122,396 tonnes, 104 tonnes shy of the previous month's all-time high record of 112,500 tonnes.

 

However, according to data released on December 3 by Australia's Department of Agriculture, the figure still represented a 13% jump from beef exports of the same month last year recorded at 99,800 tonnes.

 

Easily it was the highest monthly November figure on record, industry observers said.

 

In October, Australia's beef exports to all markets reached a dizzying 122,500 tonnes.

 

Normally a 10,000 tonne deficit in exports from one month to another would be seen as a "significant slump" in trade, but in the context of the 2014 slaughter year, it is simply coming off a number which would previously have been thought impossible, given slaughter capacity and turnoff patterns in Australia.

 

Give that the Eastern States seven-day slaughter tally for the week ended Saturday reported by the National Livestock Reporting Service showed yet another all-time record Australian kill, there is every likelihood that December will also set an in-month export record.

 

It will bring to a close a tragic, and entirely unsustainable passage in the Australian beef industry's history, that can only be broken by widespread and substantial rain relief. Attention is now starting to focus on Australia's ability (or lack of it) to service export markets in the 2015 year.

 

This year's sub-continental-scale drought-fuelled surge in exports means that Australia will easily set another all-time calendar year record for exports by December 30. Already this year, January-November shipments have reached an incredible 1.171 million tonnes.

 

Compare this with the same 11-month period last year (an already high 1.003 tonnes), and the level of exports is some 168,000 tonnes, or 17% higher, this cycle.

 

In fact the average total annual export for the five years prior to this one (2009-13) was just 972,000 tonnes.

 

Barring widespread rain, at current rates of slaughter it appears that the 2014 annual total could easily exceed 1.25 million tonnes, or close to 29% above that five-year average.

 

The tragic part of that is that the biggest proportion of the increase has come from cow meat, as producers across Eastern Australia have been forced to sell-down their breeding stock in response to parched paddock conditions, and little immediate prospect of spring-summer rain.

 

It is widely conceded that cattle prices in 2014 would have been an absolute bloodbath without that extraordinary demand support, coupled with a lower Australian dollar to help drive demand and underpin prices.

 

Again it was the resurgent grinding beef market into the United States  which provided deep buying support in November, pushing to 39,089 tonnes, on top of two consecutive months of trade above 40,000 tonnes, and despite the seasonal return of New Zealand as a grinding meat export competitor.

 

Collectively, the last three months have seen the heaviest trade into the US for any period since 2005.

 

November shipments to the US were more than double the volumes seen this time last year (17,667 tonnes).

 

Calendar year to date, exports to the US have now reached 357,075t, up by an extraordinary 83% , or 163,000t on the same period last year.

 

At current rates of trade, volume to the US for the full year could easily hit 390,000 tonnes, a figure not seen since 2004. Just three years ago, as the US was liquidating its own herd, full year exports reached just 168,000 tonnes.

 

A considerable proportion of Australia's export 'surplus' this year has been diverted into an increasingly beef-starved US market, after four very quiet trading years. Already by the end of August, year-to-date beef exports to the US had exceeded full-year 2013 trade.

 

According to recent USDA World Agriculture Supply and Demand Estimates, US beef supplies are forecast to remain tight for the duration of 2015. Taking this into consideration, Australian red meat exports to the US are likely to remain high for the remainder of the year and again next year, with the only constraint likely to be tighter supplies in Australia.