LOOKING at the latest beef export figures released by Department of Agriculture last week you would hardly suspect the turmoil currently being experienced in Australia's export markets.
For the month of February, 92,968 tonnes were shipped to all destinations, which is a mere 2 per cent down on same month last year.
On the surface that would suggest things were ticking along fairly well but as always the devil is in the detail.
Given the normal time lag between production and shipping, any given month's export figures will represent production from the latter part of the month before.
January this year had a strong carry-over of drought related bookings from December last year and despite the start of the good rain mid-month, kill numbers in the last weeks of January were very strong as indicated by the MLA slaughter figure of 147,000 head for week-ending January 24.
Numbers continued to remain reasonably strong as it took four weeks to drop down to 133,000 in the second-last week of February.
Then the accumulating rainfall totals really started to bite and one week later the kill had fallen to just 119,000 head.
In essence, the February export figures reflect a kill that held together reasonably through late-January to late-February and also the fact that while faltering, the wheels hadn't completely fallen off the Chinese wagon in that time space.
But March will be another matter.
China still represented 16,732t of beef exports from Australia in February and as recently as 13 months ago that would have represented an all-time record monthly shipment.
But a lot has happened in the Chinese market in the past 12 months and that figure now represents a 20pc fall on January's tonnage and a 12pc fall on same month last year.
With anecdotal reports of only isolated air-freight consignments and minimal conventionally shipped product going to China in the past couple of weeks, March's expected tonnage will look very stark against the 34,000t per month recorded in the latter months of last year and serve to warn of the consequences if other beef-customer countries such as South Korea and Japan need to resort to widespread lockdown to bring coronavirus under control.
As it is, voluntary restraint from travel and dining out will reverberate through the foodservice sector and have a significant impact on demand in both of these important markets.
Japan will be particularly hard hit by fall off in tourism as a large proportion of visitors to that country normally come from China.
In the meantime, Australia exported 23,714t to Japan in February and 12,957t to South Korea.
In both instances these totals were little different to same-period in 2019, suggesting that any hit to trade will show up in March and subsequent months' figures.
For both these higher-end markets, high feedlot inventories continue to underpin supply as they have done throughout the drought years but that now looks to be a challenging proposition.
Extraordinarily high feeder cattle prices may see a fairly rapid run-down in feedlot numbers unless there is some give in cattle and/or ration costs.
One major processor with extensive feedlot capacity of their own said last week that they have been standing back from the feeder market for several weeks now because they simply don't believe they can get out of such cattle.
On the other side of the Pacific in the United States, investor reaction to the worsening economic situation has seen commodity markets follow the same precipitous collapse as experienced in the equities market.
Live cattle futures have taken a big hit, which in turn has impacted cash prices for fed cattle.
In their report last week, Steiner Consulting was very downbeat about what this meant for US beef import prices.
They said, "Given the sharp decline in domestic values, it is simply impossible to make imported offerings work in the US market."
In essence, the February export figures reflect a kill that held together reasonably through late-January to late-February and also the fact that while faltering, the wheels hadn't completely fallen off the Chinese wagon in that time space. But March will be another matter.
Not surprisingly, Aust/NZ 90 CL blended cow lost a further US$5/cwt bringing it down to US$215/cwt (hundred pounds) FOB East Coast.
This further highlights what Australian processors have been on about for a number of weeks now, the widening disconnect between Australian cattle prices and the market for meat.
But while cattle are being slaughtered the meat has to go somewhere and despite the unattractive rates, a lot of product is being directed into the US market.
February's tonnage was 19,484, bringing the progressive year-to-date to a level 5pc higher than last year.
What that also means for processors is a choice between the lesser of the two evils: continuing to lose increasing amounts of money or losing time.
Ultimately, losing time is the only real option against a broken-drought supply outlook of considerably fewer numbers.
But finding that balance, particularly while it is still raining with floods in the west and a cyclone threatening, is the tricky bit.
A month of sunshine will see numbers start to build and logically some price correction but in the meantime it seems to be a case of wait and see.
Product starting to trickle back into China
AFTER a pretty ordinary time there is finally a little bit of better news insomuch that some movement of product into China is under way.
A processor contact earlier this week advised that containers are starting to get unloaded.
Also the extent of difficulties faced by exporters is becoming clearer.
Advice is that the three major shippers have all been applying an $1100 per container surcharge on anything with a China address but no guarantee that if it was destined for Shanghai you would get it unloaded there.
If there was no prospect of getting a space with plugs on Chinese docks, containers were offloaded in Singapore with little more than a "bad luck, that's where it is".
Latest grid prices in south Queensland show a 10c spread between major players for 4-tooth ox at 640-650c/kg and a 20c spread on cows at 550-570c.
