US beef up 4%
13 June 2017
A combination of tight Australian cattle supplies and increasing beef exports from key competitors – namely the US – has created stronger competition in Australia’s most valuable export markets.
US production and exports
In the latest World Agricultural Supply and Demand Estimates (WASDE) published by the USDA, the US beef production forecast for the 2017 calendar year has been revised lower from the May projections, to just under 12 million tonnes. The revision is a result of declining carcase weights for fed cattle – reflective of a more rapid pace of marketing, as cattle are spending fewer days on feed. However, the 2017 projection is still 4% higher than 2016 levels.
The 2017 calendar year forecast for US beef export volumes has remained unchanged from what was previously projected in May, to 1.29 million tonnes carcase weight equivalent (cwe). Robust global demand has encouraged a shift in the US market towards higher valued export markets.
For the 2016/2017 US fiscal year (1st October through to 30th September), the value of US beef exports is forecast to move higher by US$200 million, to US$6 billion (Quarterly Agricultural Export Forecast by the USDA).
Year-to-April US beef exports to Japan totalled 81,500 tonnes shipped weight (swt), a 37% increase year-on-year. The value of beef exports to Japan over the same period increased 39% year-on-year, to US$452 million FOB. High domestic Wagyu prices and excellent seasonal conditions in Japan have supported demand for imported beef. Australian beef exports to Japan also performed strongly for the year-to-April, at 85,000 tonnes swt – increasing 11% year-on-year.
US beef exports to Korea have also benefited from increasing US production and strong demand for beef – at a time when Australia production has slowed. Year-to-April US beef exports to Korea were 21% higher year-on-year, at just over 49,000 tonnes swt – worth US$321 million FOB, up 28% compared with the same period last year.
In the short term, Australia will be limited by supply constraints before production begins to increase towards 2018. The competition posed by the US offers a variety of short-long term challenges, particularly to key markets such as Korea.
MLA's Market Information Service recently released a red meat research report focusing on the prospects of the Korean beef market from an Australian perspective. The report closely examines long-term macro drivers, such as a rising but aging population and falling tariffs on beef imports from the US and all other major suppliers.
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