2016 Grainfed beef exports just short of record levels

09 February 2017

Australian grainfed beef exports for the December quarter of 2016 eased 7% from year-ago levels, totalling 64,290 tonnes swt (Department of Agriculture and Water Resources). This took total grainfed exports for 2016 to 260,386 tonnes swt, just 1% short of the record high volume in 2015 which stemmed from the high numbers on feed during that period.

2016 December quarter grainfed beef shipments to Japan declined 10% year-on-year, to 32,522 tonnes swt. Constrained by tighter Australian cattle supplies, coupled with greater competition from increasing US beef production, grainfed exports to Japan for 2016 reached 129,005 tonnes swt, back 8% year-on-year.

High Hanwoo beef prices in Korea and tight supplies of Australian grassfed beef have seen Australian grainfed exports to Korea continue to increase. Shipments for the 2016 December quarter lifted 26% to 16,238 tonnes swt, despite incurring ‘above safe guard’ tariffs of 40%. This pushed the 2016 total volume of grainfed beef exports to Korea to record levels, to 55,756 tonnes swt (up 26% year-on-year).

Despite grainfed exports to China easing 18% year-on-year for the October to December period (5,656 tonnes swt), total volume for 2016 lifted 9%, with 23,557 tonnes swt exported.

Volumes to the EU declined 25% for the December quarter, however total volumes for the year declined only marginally year-on-year (back 1%) to 15,980 tonnes swt.

In the US, increasing domestic production has weakened demand for Australian imported product, which contributed to exports halving year-on-year in the final quarter of 2016, while total volumes for the year slipped 36% from 2015, to 9,770 tonnes swt.

Shipments to the Middle East for the quarter were down 43% (to 1,332 tonnes swt), while the total for the year eased 34% to 6,434 tonnes swt, as subdued oil prices, increased competition from Brazil and reduced tourism impacted demand.

Firm economic growth, strong demand and a shortage of Australian grassfed product saw grainfed exports of predominantly manufacturing beef to the Philippines lift 11% for the quarter to 1,957 tonnes swt, taking the 2016 total to 8,377 tonnes swt, up 67% year-on-year.

Going forward, numbers on feed are expected to continue to decline from the high base of 2015, on the back of tighter supplies and fierce competition from restockers, putting further upward pressure on the the young cattle market. As a result, expectations are for cattle to stay on feed for 10-20 days longer, due to the low feed grain prices, which should raise weights and mitigate the fall in grainfed beef production to some extent. Although the shortage of grassfed supplies has seen traders pushing into grainfed product to secure volume, export volumes of grainfed beef are likely to decline predominantly as a result of the fewer numbers on feed.

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