7.4. Australian cattle industry projections - beef exports CIS/Russia
The world’s second largest imported beef market (behind the US). Russia has developed into Australia’s fourth largest beef export market, behind Korea and ahead of Indonesia and Taiwan. Russia’s influence upon the Australian beef trade in recent years has been considerable and has come largely through increased competition for lower valued manufacturing beef cuts.
This trade has also been timely, given the weak demand for quality beef cuts, helping to fuel a significant shift in the composition and destination of Australia’s beef trade in recent years.
Australia’s beef and veal exports to the Commonwealth of Independent States (CIS), but predominately Russia, totalled 55,900 tonnes swt in 2011. Combined with very limited exports to other smaller Eastern European markets, exports for the past year were back just 2% on 2010 (57,100 tonnes swt). It should also be noted that the consolidation of the Russian market demand through 2011 contributed to the lower shipments to the US.
However, one feature of 2011 was that exports were more stable throughout the year, with a monthly high of 7,000 tonnes swt in September. This contrasts with the two previous higher years of 2010 (9,995 tonnes swt) and 2008 (17,557 tonnes swt), when exports hit considerably higher monthly peaks, but also registered months of very low shipments. Hopefully, this is evidence that the Russian beef market is becoming a more stable and consistent one for Australian exporters – a factor that will help to underpin beef trade into 2012.
In consolidating its growth in 2011, manufacturing beef that the main item demanded by Russian importers in contrast to silversides/outsides in 2010. In 2011, 97% of Australian beef exports to Russia was frozen grassfed beef and 38% was manufacturing beef, compared to 27% in 2010. The recent emergence of Russian demand for Australian manufacturing beef has added another large buyer to this market, competing against Japan, the US and Korea for lower priced frozen beef.
Other cuts to leave Australia for Russia in significant volumes in 2011 included silverside/outsides (23% of total exports), chuck and blade (10%), blade (9%) and thick flank/knuckle (9%).
After a volatile trading relationship in the wake of the Global Financial Crisis in 2008, Australian exporters in late 2010 and throughout 2011 have become more comfortable in trading with Russia. While any currency and economic upheaval could erode some of this confidence in 2012, the outlook for Australia’s trade with Russia remains positive. Indeed, with very tight beef supplies from traditional South American suppliers, Brazil and Argentina, Russia continues to look towards Australia as a reliable supplier of quality frozen grassfed beef.
Underpinned by continued tight supplies from South American producers, sustained economic growth and provided there are no access issues associated with the allocation of import permits, Australian beef and veal exports to Russia in 2012 are forecast to increase 25%, to 70,000 tonnes swt.
With the USDA forecasting Russia to import in excess of one million tonnes cwt of beef in 2012 (up from 728,000 tonnes in 2010), the opportunity for Australia to consolidate its presence in the Russian market is considerable – especially with the outlook for additional Australian beef to be produced from 2012 and beyond.
The prices of manufacturing beef to the US and even Japan will be the main determinant of trade flows in 2012. Given the positive price outlook for the US, Russian importers are likely to face fierce competition for suitable product.
The performance and demand for manufacturing beef in Russia throughout 2012 will have a large influence upon the volume of product that flows to the US and vice versa.
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