Beef exports feel supply pinch

06 July 2017

Two years of drought-driven herd liquidation, which saw the Australian cattle herd hit a two-decade low, resulted in a considerable reduction in beef available to export over the past 12 months.

For the 2016-17 fiscal year, Australian beef exports slipped below the one million tonne mark for the first time since 2011-12. Volumes reached almost 963,000 tonnes shipped weight (swt) in 2016-17, a decline of 17% year-on-year (DAWR).

Compared to the five-year (2011-12 to 2015-16) average, 2016-17 shipments were back 19%.  

Beef breakdown

Grassfed beef exports for the 2016-17 fiscal year were 22% lower, at 705,000 tonnes swt. Improved seasonal conditions across cattle producing regions incentivised producers to retain stock and start to rebuild their herds, underpinning the limited availability of product for export.

Grainfed beef exports totalled 258,000 tonnes swt, down 4% from 2015-16 levels. A combination of high domestic cattle prices and lower grain prices saw numbers of cattle on feed across the country surpass one million head for the first time in the March quarter 2017. 

The proportion of grainfed exports to total Australian beef exports in 2016-17 reached 27%– the equal highest proportion with that of 2007.

 Key Markets:

At 279,000 tonnes swt, Japan was the only major export destination of Australian beef to record an increase in the year to June 2017, up 4% year-on-year. Beef import growth in Japan has been partly driven by a continued contraction in domestic supply but due to high domestic Wagyu prices. More recently, Australian exports have benefited from a tariff reduction under Japan Australia Economic Partnership Agreement (JAEPA).

Shipments to the US in 16/17 totalled 209,000 tonnes swt, a decline of 37% year-on-year (125,000 tonnes swt). Rising US beef production, as well as Australian beef supply constraints, were the predominant factors limiting export volumes to the US market throughout the financial year.

Exports to Korea declined 6% year-on-year, to 162,000 tonnes swt. The upturn in US production, and consequently a stronger export focus, created robust competition from US exporters supplying this market. Furthermore, along with lower Australian production, a number of short term factors contributed to reduced Australian beef exports to Korea. These include anti-corruption legislation, economic/political uncertainty and import financing concerns – albeit the long term prospects for this market remain strong.   

Fiscal year beef exports to China fell 24% year-on-year, to 97,000 tonnes swt. The presence of lower-value product from Brazil in this market continues to challenge Australian exports. However, grainfed exports to China increased 11% year-on-year, at 26,000 tonnes swt.

In other markets, 2016-17 fiscal year beef exports into the EU declined 28% year-on-year, to 17,000 tonnes swt. Beef exports to Indonesia totalled 51,000 tonnes swt, down 7% – largely due to high Australian cattle prices but also the ongoing presence of Indian Buffalo meat.

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