AUSTRALIA’S reputation for high quality beef continues to be as important as ever with increased international competition in global export markets going forward into 2018.
Meat & Livestock Australia (MLA) produces an annual industry projections report on beef and live exports, this year predicting a challenging year ahead for Australian beef exports, up against increased production and exports from many of our major competitors including the United States and Brazil.
The Australian cattle industry projections 2018 report showed Australia’s boxed beef exports are expected to edge above one million tonnes shipped weight (swt), which will be larger than any year prior to 2013.
A key factor of this increase is attributed to the US market with consumers there continuing to increase their per capita consumption, which is keeping much of the increased beef production in the US on home shores and away from Australian export markets.
More broadly, the report said the global economy has a much more positive outlook than this time last year with key regions, including the US and many parts of Asia, registering improvements in key economic indicators.
Many developing markets are also marked for some significant improvements in household wealth which the report noted generally flows through to an increase in protein consumption which together with natural population growth, should see beef consumption keep on expanding globally.
The report showed Australian beef exports ended 2017 in line with 2016 levels at 1.01mt swt, with both chilled and frozen product consistent year-on-year.
There was an uplift in volumes to Japan and China which helped offset a drop in volumes to Korea and Indonesia.
Australia’s improving supply situation comes at the same time global supply is expected to increase by more than 1mt in 2018, meaning Australia will be competing in the international market with a strong supply of beef.
All up, Australian beef exports are expected to increase to 1.04mt swt in 2018 which is a modest increase on 2017 and down on 2013-2015 volumes, but stronger than any year prior to 2013.
China and the US are forecasted to be the two main growth countries for beef consumption in the coming years globally, both of which will be crucial in soaking up the growing global supply.
The report showed Japan finished 2017 as Australia’s biggest export market for beef despite strong competition from the US.
Volumes to Japan from Australian were up by 11 per cent to 292,000 tonnes swt which was driven by growth across both frozen grainfed beef (up by 20pc) and frozen grassfed beef (up by 18pc) while chilled beef remained stable.
Looking to China, beef export volumes increased in 2017 after a significant drop in 2016.
The report showed almost all of the growth was driven by frozen grassfed products going into China (up by 22pc), making up about 70pc of Australian exports to the market.
Beef exports to the US ended 2017 just below 2016 levels at 234,000t swt and manufacturing beef remains dominant there, accounting for 63pc of Australian exports.
The US also continues to take a growing share of Australian chilled grassfed exports which reached 58,000t swt in 2017, up from 21,000t swt in 2010.
Turning to live exports, the MLA Australian cattle industry projections 2018 report stated 2018 will likely mirror 2017 for live exports which were restricted by tight domestic supply, high cattle prices and on-going international market uncertainty.
In 2017, Australian live cattle exports were down 22pc, reaching just less than 855,000 head.
The report expects live exports to increase from the level set in 2017 in the coming years, but it is unlikely levels will reach recent highs.
South East Asia remains the key export region for Australia’s live cattle, with more than 80pc of the entire Australian consignment heading there, including to Indonesia (60pc) and Vietnam (19pc).
The report showed shipments of feeder and slaughter cattle to indonesia in 2017 totalled 499,000 head, which was down 16pc from a year ago.
This was attributed to high Australian cattle prices, Indonesian government policies and the increasing foothold of Indian Buffalo meat in the Indonesian market.
Exports to Vietnam were also down by 15pc from year ago levels, totalling 165,000 head in 2017.
The report expects prices for beef and cattle to come under some pressure in 2018 as international competition intensifies and supply increases, the impact of this will depend on the level of restocker activity and strength of underlying demand for beef in Australia and overseas.
