Big surge in trade into the US highlight for July beef exports

AUSTRALIA’S monthly beef export volume continued to gather pace during July, headlined by another leap in volume consigned to the United States.

The gradual lift in slaughter volumes during winter has driven more trade into Australia’s key export markets around the world – at the same time as US beef exports have declined.

Our shipments to all markets last month topped 97,305 tonnes, the second highest volume seen since 2020, when drought was still fuelling heavy rates of slaughter across eastern Australia.

July export volume was 3300 tonnes of 3.5 percent higher than June, and a dramatic 22,300t or 30pc higher than July last year, when Australian beef herd recovery after drought was still hampering production volume.

Calendar year-to-date for the seven months to the end of July, beef exports have soared to 575,684 tonnes, a dramatic 102,200t improvement on the same seven months last year.

Virtually all major and emerging customer markets have lifted volume, but the United States is clearly the standout in recent trade performance.

Last month, Australia’s shipments to US east and west coast ports topped 23,910 tonnes – the biggest monthly volume seen since 2019 – up another 3300t or 16pc on June shipments, and a massive 120pc or 14,000t higher than July last year. June was the first month in at least three years where the US featured as Australia’s largest volume export customer, having placed third or fourth behind Japan, China and even Korea for long periods since 2020.

Last year’s opportunity to export to the US was severely hampered by the US industry’s own drought at the time, forcing heavy liquidation of the US cow herd. Australia’s primary exports to the US are frozen manufacturing (cow) beef, used for hamburgers – a commodity that the US had in abundance during its own drought.

For the calendar year to the end of July, our exports to the US have totalled 112,950t, up from 70,500t the same period the year before.

The US is likely to bid Australian business away from other import competitors in the months to come, as US beef production continues to slow, meat traders suggest.

Japan was Australia’s second largest offshore beef customer last month, taking 17,732t, down about 1100t on the previous month, and back a similar amount compared with July last year. For the first seven months of trade in 2023, volume to Japan has reached 120,225t, about 7000t or 2pc behind last year.

South Koreans – easily Asia’s biggest beef eaters, on a per capita basis – continue to fill an important and stable role for Australian export beef, taking 16,960t, up 17pc on the previous month, and plus 13pc on July last year. Calendar year to date, Korean volume has reached 104,080t, some 18,000t or 21pc higher than last year as available Australian production volume has grown.

For the first time in the past 12 months, China has slipped to fourth place in volume rankings in Australian beef exports, accounting for 16,807t during July – down 14pc from the month before, but still 34pc higher than July last year.

For the calendar year to date, China has now taken 115,746t, almost 30,000t or 35pc higher than last year. Part of the reason for this year’s jump was the impact from Brazil’s earlier temporary suspension in trade into China after the detection of an atypical case of BSE in March this year. Australian beef was used to partially fill the void, in the absence of much larger Brazilian shipments until May.

Among smaller and emerging markets, trade into Indonesia continued to grow last month, reaching 6887t, and 18pc jump on the previous month and 74pc better than the quiet period this time last year. Seven-month trade has hit 38,184t, up a dramatic 75pc on last year.

The Middle East region including seven customer countries was down a little last month at 2154t, while seven-month trade has reached 14,769t, down about 1000t on the previous year.

UK trade off to a slow start

July represented the second month of trade in Australian beef into the United Kingdomfollowing the activation of the new Free Trade Agreement, which now sees exports arrive tariff-free.

While stocks were evidently run-down during May to take advantage of the tariff relief, trade during June and July was very quiet, to say the least. Just 304t of Australian beef was shipped in July – virtually all chilled, boneless. That followed trade of just 273t the month before.

Clearly, there has been no dramatic surge in beef shipments out of Australia following the signing of the FTA, as the noisy UK beef industry lobby had feared.

To put the recent UK volume into context, it was about one third of Australia’s beef trade volume into Thailand last month, and two thirds of the trade into Papua New Guinea – a drop in the bucket, both from an importing and exporting market perspective.

Slow but steady growth is the likely direction for UK trade, with the prospect of a little more high-end chilled product like Wagyu likely to make an appearance under the new tariff-free regime, later this year.

Beef production forecast to rise

MLA’s recent mid-year 2023 industry projections have been amended upwards, with beef production forecast to strongly increase in the back half of this year as a result of higher slaughter cattle supply, improvement in processing capacity and historically elevated carcase weights.

Australia’s national slaughter for calendar 2023 is now forecast to reach 6.95 million head, a 5pc upwards revision, representing 325,000 head, on MLA’s original January forecast. That in turn has pushed expectations for total beef production and beef exports higher.

Total beef production for export and domestic use is now expected to hit 2.2 million tonnes, up by 100,000t from 2.1mt in January. Exports are also forecast higher – now 1.09mt shipped weight (1.599mt, carcase weight), versus 1.014mt/1.49mt at the start of the year.

Processing labour is now the key limiting pinch-point in terms of further advances in export volume, in the face of a growing supply of slaughter-ready cattle.