A MONTH ago, US-based market analyst Steiner Consulting made a startling prediction that Australian beef exports to China for the month of November would exceed 35,000 tonnes.
All they had to go by was the preliminary export statistics published by the Australian Department of Agriculture for the first seven days of the month and their feel for what was happening at the trading desks.
While the margin for error was large, it turned out that Steiner was close to the mark when the figures for the full month were published last week.
The volume for the month was 34,264t, by far the biggest month in Australia's eight-year history of exporting to mainland China.
It also brings the number of record-setting months this year to eight which highlights the accelerating nature of China's surging demand.
On a progressive basis to end of November, volume now stands at 265,841t, more than 100,000t greater than the total for the whole of 2018 which in itself was a record year.
With December still to come for the 2019 total, it will mean that China will end up taking around 295-300,000t making it Australia's biggest beef customer by volume.
But how long it can retain the number one slot remains to be seen.
Of the 265,000t volume to date, 240,000t is frozen beef attributable in large part to the high number of females slaughtered in Australia this year as drought continues to force herd liquidation.
If it rains, cow supply will dry up overnight and what lean product Australia does continue to produce from a hugely depleted herd can be expected to go in the first instance to established customers.
Australia may not have a lot of lean beef to offer under those circumstances and that could be expected to reflect in China's figures more so than other markets.
In the chilled beef segment, China's take out of Australia so far is just 25,000t.
For a number of reasons it may be that China can continue to build on this volume in contrast to the frozen beef situation.
The new rules of the game for EU's high-quality GF quota will almost certainly see China with its HGP-free requirement take a progressively higher proportion of Australian production that would otherwise go to the EU.
Also there is an emerging production trend that suggests feedlot occupancy will continue in strong numbers after the drought breaks thereby assuring consistency and reliability in supply to meet HQ markets.
Feedlots have proved indispensable throughout this drought absorbing huge numbers of steers that would normally be afforded the best of the grass in order to be turned off as three-year-old ox.
It now seems that the drought may have served as a catalyst for change and retention of steers for fattening on grass may not return to the same level after the drought breaks.
Instead it appears that the grass will be directed at the breeding herd as producers adjust their focus to fertility and live calves on the ground in the drive for profitability.
Just as five-year-old ox disappeared from what was euphemistically called the bank-manager's paddock years ago, further change in herd composition along similar lines may be occurring.
US, Japan, Korea down
NOVEMBER tonnage to the US was 13,776, down more than 8000t on previous month.
In a year when monthly volumes have mostly been in the low/mid 20s, this is a stark development but not without precedence.
A drop of similar magnitude occurred in 2015 and there have been a number of years in recent times when a drop of 4-5000t occurred between October and November.
As Steiner explained in their report last week, this may be a seasonal thing.
Following Thanksgiving and leading into the December holiday season there seems to be a lull in activity with positions usually already covered for the remainder of the year.
At the same time there was a spectacular bidding war between Chinese and US buyers in November driving the FOB US East Coast price of Aust/NZ 90CL blended cow from US$249/cwt (100lbs) to US$309.
US buyers may have been prepared to let it go to the Chinese and that would help to explain the upward and downward spikes in the respective countries' shipped volumes for November.
Despite the November plunge, the progressive tonnage to the US market is still slightly ahead of 2018 by 3.6 per cent.
Japan on the other hand is continuing a downward trend in beef imports from Australia that was only momentarily interrupted by a very slight rise in the month of September.
November's 23,702t was 1300t down on October and a whopping 5400t down on same month last year.
But at a progressive count of 266,000t for the year thus far, Japan is still Australia's number one market in value.
The challenge ahead will be to hold on to what we have as the US can be expected to come back hard in the New Year with the benefit of their new trade-deal with Japan.
In fact it appears to have started already with product being booked for delivery once the reduced tariffs are in place.
Steiner notes that in the past four weeks, US beef export net sales to Japan were 85pc higher than same time last year.
The US has also been very active in the Korean market with beef exports to that country in October displacing Japan for the top spot.
But this probably had as much to do with depressed sales to Japan because of the high tariffs (38.5 to 50pc) the US has been faced with there. Its exports to Japan in October were 24pc lower than a year ago.
Australia's beef exports to Korea are currently 4.4pc behind last year.
Unfortunately we remain captive to a very restrictive safeguard and unless our trade officials can renegotiate, it will continue to limit Australia's opportunity for growth in this market.