Big US beef supplies felt in our markets

US exports grew 9 per cent for the year-to-September on the back of abundant grain supply and a herd that has significantly recovered.

Last year, Australia sent the biggest volumes of its beef to the US but Japan has now returned to being our largest destination.

The latest Meat and Livestock Australia figures show Australian beef exports for the year-to-November totalled 928,754 tonnes shipping weight, well back on record volumes shipped last year but still in the top five figures on record.

Australian exports to the US to November have declined a massive 42pc on the same period last year.

At the same time, the US is clearly eyeing off Australia’s prized Asian markets, with its increased volumes driven largely by a 15pc and 31pc lift in shipments to Japan and Korea respectively.

Australia does still hold the largest market share in Japan, MLA reports.

The expectation is the US will invade our territory more in the next year year or so.

National Australia Bank agribusiness economist Phin Ziebell said with American corn-fed beef competing against Australia in some of the big East Asian markets, some price pressure for Australian exporters should be expected, especially if corn prices stay so low.

“This raises some risks to the Australia-Japan price outlook in 2017,” he said.

Korea has continued to import increased volumes of Australian beef throughout the year, according to MLA.

Year-to-November volumes increased 9pc year-on-year and 29pc on the ten-year average.

“We’ve seen a couple of factors underpinning strong beef demand for imported beef in Korea,” Mr Ziebell said.

“The first has been high domestic Korean (Hanwoo) beef prices from a smaller herd and a need for herd rebuilding.

“The second, more recent, factor is the anti-graft law that applied from September. It banned public officials from receiving more expensive paid meals. This has cut some of the market for Hanwoo beef and is good news for importers.”

It was likely demand for imported beef in Korea would stay strong into next year, he said.

In China, South American competition would remain the major concern, especially from Brazil and Uruguay, Mr Ziebell said.

NAB Agribusiness’ latest beef and cattle outlook says two years ago Australia supplied 45pc of imported beef to the Chinese market but in the first eight months of 2016 that shrank to 19pc.

The drop was fuelled by a lack of price competitiveness and increased access by Uruguayan and Brazilian beef.

On the domestic front, restocking interest has driven the high prices, the NAB outlook says, and while that has been supported by a wet winter and spring, as the weather dries out there would be considerable risk to saleyard prices.

The Eastern Young Cattle Indicator (EYCI) has fallen from its peak of 725 cents per kilogram carcase weight in August to finish 2016 at 634.5c/kg.

NAB is forecasting it will be at 500c/kg in the September quarter of 2017, which is still above the range of prices prior to 2015.

“It has been our view for some time that the international beef outlook is now much weaker than in 2014 and 2015 and if eastern Australia sees a hot, dry summer, as per the Bureau of Meteorology’s latest forecasts, restocker interest could slow rapidly,” the NAB outlook summary said.