Market watch: March exports
11 April 2018
Australian beef exports in March totalled almost 90,100 tonnes shipped weight (swt) – almost identical to shipments in the same month the year prior, and a 6% lift from beef exports in February.
Through the first quarter of 2018, beef exports recorded a 10% increase compared with the same period last year, at 237,700 tonnes swt. Higher than anticipated turn-off during January and February as a result of dry conditions across northern NSW and Queensland supported the lift. Historically, exports in March surpass January and February levels – this year was no different, given trade resuming after the holiday period and the additional processing days.
Some good rainfall at the beginning of March saw adult cattle slaughter contract as producers looked for some additional weight gain as moisture conditions improved. However, during the latter part of the month, a lift in weekly slaughter levels was apparent, helping to support the March export total – with cattle producers buoyed by improved over-the-hook prices.
- Beef exports to Japan totalled 26,100 tonnes swt – back 7% year-on-year.
- Shipments to the US totalled 19,750 tonnes swt – a 10% decline year-on-year.
- Exports to Korea increased 7% year-on-year, to just under 13,000 tonnes swt.
- Beef exports to China lifted 8% year-on-year, to 11,500 tonnes swt.
- Shipments to the EU dropped 21% year-on-year, to just under 1,300 tonnes swt.
- Exports to Indonesia were recorded at 4,850 tonnes swt – 79% higher year-on-year.
Exports to Japan and Korea trended in the opposite direction in March when compared to last year. However, both have recorded increases for the calendar year-to-March, up 2% and 8% respectively.
A variety of market challenges affected trade to Korea in 2017 and while some will continue – specifically US competition – Australian beef remains extremely popular among Korean consumers through both foodservice and retail. Also supporting beef exports to Korea has been further tariff reductions under the Korea–Australia Free Trade Agreement (KAFTA), with import tariffs moving 2.7% lower at the beginning of 2018 to 26.6%.
For Japan, as at 31 March 2018, under the Japan–Australia Economic Partnership Agreement (JAEPA), Australian chilled and frozen beef import tariffs were reduced to 29.3% and 26.9%, respectively. However, the US will see tariff’s on frozen beef exports to Japan revert back to 38.5% following a ‘snapback’ to 50% in July 2017, as safeguard volumes were exceeded by ‘non-EPA’ nations (e.g. US, NZ, Canada).
Shipments to the US have edged lower year-on-year, as Asian markets have sustained robust demand for Australian product but the decline, more so influenced by increasing US production. Estimates from the US suggest that the supply of cattle that have been on feed for more than 120 days on 1 April will be around 24% higher than the same time last year. The prospect of greater domestic supplies and the price premium for imported beef has contributed to a quieter trading environment.
Beef exports to China have performed strongly during the first three months of 2018, up 27%. While China remains a very price-sensitive market and hence a challenging market for Australia, exports during the first three months provide a strong indication of the growing demand in China for high quality Australian product. Grainfed exports surpassed 3,000 tonnes swt for the first time in a month.
In other markets, beef exports into the EU in March declined 21% year-on-year to 1,300 tonnes swt. Beef exports to Indonesia totalled 4,850 tonnes swt, up 79% on the year prior.
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