Big start for 2016 for beef imports into Korea
20 July 2016
Korean beef imports for the first six months of 2016 were the highest on record (dating back to 1989), at 182,991 tonnes shipped weight (swt) – substantially higher than 2015, and easily surpassing the old record of 160,435 tonnes swt in 2003 (Korean International Trade Association).
The total import volume included the largest volume of Australian beef on record for this period, at 95,836 tonnes swt, making Australia the largest imported beef supplier for the year to date. The US was the next major supplier of imported beef, with 71,422 tonnes swt. This was well below the 2003 high of 106,556 tonnes swt, before the BSE-related ban on US beef.
The record import volumes are a combination of both supply and demand factors. The Korean cattle herd is in a downturn at present, after a substantial government program to reduce numbers and help keep cattle producers profitable. As a result, there is a limited supply of domestic beef on the market, making domestic beef more expensive, and encouraging importers to purchase overseas beef more heavily than in previous years.
On the supply side, US beef production is growing again, and has found a ready market for large volumes of short ribs. Australian exporters have found good support for trade in cuts that are traditionally popular in Korea, including short ribs, chuck and blade, as well as for brisket, which is normally not a large export item for the Korean market. The very large volumes of imported beef in the market have resulted in a significant discount of imported beef prices compared with domestic Hanwoo beef, and there is speculation that the brisket trade will slow sharply in the coming months, with stocks well supplied at present. Australian point-end brisket prices have dropped from 9,600 Korean won/kg at the end of December 2015 to 7,000 won/kg at the end of June 2016.
By way of comparison, imported Australian short ribs in the Korean wholesale market averaged 13,300 Korean won/kg in June, up 13% year-on-year, compared to US at 14,400 won/kg, up 1% on last year. Hanwoo (high quality domestic) beef averaged 19,037 won/kg and other domestic beef was 9,919 won/kg (Korean domestic prices are general beef price averages, not just short rib).
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