Australian cattle producers are experiencing a boost in sales, and returns for lean ground beef, driven by increased demand from the US.
Meat & Livestock Australia' analysis shows the benchmark for Australian manufacturing beef exports, the imported US 90CL beef indicator, has risen 75 c/kg so far this year, with exports increasing by 12 per cent.
Senior Market Analyst with MLA, Adam Cheetham, said Australian producers are getting the benefit of US consumer's demand to fire up the grill.
"The seasonality there has an influence," said Mr Cheetham.
"At the moment the US is in what we call grilling [or] barbecue season. So demand for ground beef which goes into their hamburgers is obviously reaching a peak. We've seen that reflected in the markets with 90CL prices as well."
For US importers, Australia's leaner manufacturing cuts help offset domestic supplies of more fatty cuts, and that, combined with strong demand from Asia and a softer Australian dollar, means that Australian 90CL export prices are at levels not seen since 2015.
But as Adam Cheetham points out, BBQ season, will not last all year.
"As the US comes out of it it's grilling season, naturally what we see is a shift from grinding beef into more of your prime roast cuts. I wouldn't expect it to be sustained at these levels at the end of the year."
Meanwhile Asia has emerged as a major buyer of manufacturing beef in general, particularly at the fattier end of the spectrum. Australia has sent 20 per cent its beef exports to China so far in 2019, up from 10 per cent five years ago. Japan remains a major market for manufacturing beef and prime cuts.
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"There's been a growing demand for protein across Asia," said Mr Cheetham.
"[This] is in line with with increasing household incomes and demand for red meat, and more high value red meat, which Australia can provide. In terms of grinding beef that's catering to more of that western diet.
"So we've seen demand in Japan be pretty strong now for a number of years. South Korea of course has come online, and China, everyone knows the story there in terms of their protein demand. So it's another avenue to service a market for Australian red meat. So really strong demand from Asian markets, and that's been one of the drivers of the 90 CL prices as well.
Increased US and Asian demand comes as the drought affecting large parts of the country and the cold conditions in the southern states, puts pressure on producers to sell cattle which ideally they would keep for future breeding.
"The story there has been the national wave of destocking that we have seen," said Adam Cheetham.
"Amongst the breeding herd we have seen female slaughter reach record levels at 58 per cent in April and May. What I always say is there's still plenty of cattle still out there. Yes we are in a wave of destocking, and the breeding herd is being hit relatively hard, but there's plenty of cattle out there and the incentive for producers to rebuild when we do see a turn is most definitely still there"
Late last week market analyst group Mecardo released figures indicating a signficant increase in the number of cattle going to slaughter in Victoria and South Australia.
Their figures show that the Victorian slaughter is up 8.5 per cent year to date compared to the same period last year. In South Australia the closure of the Murray Bridge works in January last year means the year to date figure is 24 per cent below the five year average, but for this year to date it is up 16 per cent on last year.
Over the past week numbers being offered at sales in Victoria and South Australia have been variable. Some yardings, like Colac and Mt Gambier were up, with quality described as variable, and strong demand for anything that was heavy.
In Ballarat, MLA reports just 158 head were on offer this week, half of which were cows, and the market is described as firm to dearer. In Pakenham on Monday 800 head were on offer, 80 more than the week before. Quality is described as limited, but prices firm with cows up to 25 c/kg dearer.