March 8, 2010

Low supply constrains Australia beef shipments in February

Australian beef and veal exports contracted significantly during February, as the combined impact of the high Australian dollar and limited supply continued to restrict processing capacity.

Exports for the month totalled 62,138 tonnes swt, down 22% in the same period last year. This is the lowest February volumes since 1997, according to data from the Department of Agriculture, Forestry and Fisheries.

Shipments to the US dropped 48% year-on-year to 14,481 tonnes swt, despite higher US import prices and constrained US beef stores. Volumes to Japan dropped 11% to 26,581 tonnes, while exports to South Korea fell by 10% to 7,505 tonnes, primarily due to supply even though there were solid buyer interests from both markets.

Australian beef exports in February to the South East Asia and Greater China region were back 12% year-on-year to 8,781 tonnes swt. This was consistent with overall Australian beef exports during the month which were affected by a lack of supply.

The three largest export destinations in the region for Australian beef are Indonesia, Taiwan and the Philippines, and of these, only the Philippines recorded a year-on-year increase, up 24% to 1,390 tonnes swt.

Exports to Indonesia and Taiwan declined 34% to 3,986 tonnes and 8% to 1,922 tonnes, respectively.

But with prices increasing from last year's lows after recent heavy rainfall across eastern Australia, many producers are expected to retain stock into the second quarter of 2010. This is likely to tighten the already limited cattle numbers and flow through to lower beef export supplies for the coming months.