Strengthening dollar challenges export values
27 July 2017
Despite considerable growth to some Australia’s largest value markets, total beef export returns fell 3% in May, in line with the decline in volume, to A$691.55 million (ABS). The strengthening Australian dollar against the US dollar offset the greater percentage of chilled and grainfed product exported, arising from the lower availability of grassfed product. In May, the A$ averaged 74.3US¢, 2% above the same time last year, and it has since continued strengthen in June and July.
Along with the appreciation of the A$, the overall decrease in value for the month was largely attributed to a 21% decline in volume to the US. Beef shipments to the US in May were valued at $164.17 million, sliding 18% year-on-year and representing 24% of the total Australian beef export value. Despite the decrease, returns were somewhat supported by the lift in import prices – 90CL averaged 636.14A¢/kg CIF during May, up 8% year-on-year.
The value of exports to Korea also decreased in May, with lower volumes of predominantly frozen product shipped. This trade generated $88.22 million for the month, down 24% from last year.
There was, however, considerable growth in the value of shipments to Japan in May – which accounted for the largest share (27%) of Australian beef export returns. The value to Japan lifted 16% from year-ago levels, to $184.74 million. This was primarily as a result of increased volumes exported in May.
Similarly, China – Australia’s fourth largest market by value (accounting for 10%) – increased 14% year-on-year, to $67.90 million.
The weakening US dollar and strong GDP growth in China (Australia’s largest trading partner) has aided the lift in the Australian dollar, challenging the competitiveness of Australian product in the global market. If the A$ continues to strengthen, and given US imported beef prices have begun to ease more recently, there may be further downward pressure on export values in the short term.
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