EXTRAORDINARY weather events, cattle supply shortages, COVID-induced absenteeism and general tightness in labour supply have all combined to make the first four months of the 2022 production year look like a roller coaster ride.
Floods in February were largely to blame for the minimal 59,000 tonnes exported that month.
March bounced back with improved cattle supply enticed out by the extremely good rates offered in February and saw 74,000 tonnes exported.
But April figures released last week by the Department of Agriculture dropped like a stone to just 61,705t.
By the end of March most works had a reasonable pipeline of cattle in front, so much so that by mid-April grid rates eased to the point that some of the major operators stopped quoting and just took space bookings.
Short weeks due to public holidays were partly to blame and April, as usual, had plenty of them. Easter and Anzac Day in combination with the fall of the calendar reduced normal working days for the month to just 18.
In contrast, May and June will each have 22 days with the May Day public holiday deferred for a number of plants until later in the year under enterprise bargaining agreements.
April's 61,000t is the lowest in at least the past 10 years. 2017 was the only other time April exports were below 70,000t.
All major markets shared April's reduced tonnage but the biggest hits were with Japan and Korea.
Japan fell to 13,867t after surging to 20,000t in March.
But the issue here may not be so much the extent of the fall between March and April but rather the extent of the rise from February to March.
While it hasn't happened every year, there have been noticeable surges in March shipments since the Japan Australia Economic Partnership Agreement (JAEPA) came into force in 2015.
Scheduled reductions in tariff occur on April 1.
It therefore seems likely that some accumulation of product and timing of shipment in March is occurring in order to clear Japan Customs on or after April 1 to pick up the tariff reduction benefit.
Without the additional build up in March, the variation between March and April can largely be explained by the month-to-month difference in the number of working days.
Korea dropped from 13,000t in March to 10,658t in April but again it would appear the two months are relatively consistent on a working-day pro rata basis.
China dropped from 13,500t in March to 11,730t in April.
However this would seem a better-than-expected result considering the Australian plant suspensions still in place, the lockdowns in China and their effect on demand as well as the amount of import product reportedly backing up in warehouses and shipping bottlenecks at Chinese ports.
Notably April tonnage to China this year is up by 8 per cent on same month last year.
This suggests that the China market, despite its difficulties, offers some pricing advantage over primary alternative, the United States.
April saw just 9956t go to the US.
This brings the four-month cumulative volume to just 36,880t relegating the US to a distant fourth-place destination (on volume) behind Korea, China and Japan in ascending order.
The telling point is that the average four-month figure over the past 10 years to the US is 80,000t.
Across all destinations the four-month cumulative figure for 2022 is just 238,928t.
The average four-month figure over the past 10 years is 331,000t.
Looking ahead, exports for the months of May and June should both step up to 75,000-80,000t provided the latest weather outlook does not develop into a repeat of February. But even at the most optimistic level, this will mean the first half of the year will be hard pressed to achieve 400,000t in beef exports, significantly less than last year's first-half figure of 422,000t.
That brings the second half into perspective particularly in view of the widely reported predictions from industry institutions and analysts for a significant step up in production and exports in the second half.
In that regard it will be interesting to see what revisions are contained in MLA's upcoming quarterly update to their industry projections.
STEINER'S latest weekly update on the state of play in the US imported beef market is of particular interest at the moment given the instability and uncertainty in a wide range of factors.
Firstly US domestic lean beef values are trending counter-seasonally lower.
The reason stems from higher than expected domestic lean beef supplies and a decline in volume of end sales.
Continuing and worsening drought in parts of the US is driving cow slaughter upwards and high prices at foodservice level are driving sales volume down.
In summary the report said, "The risk in the market is that it gets out of balance later this year. It takes time for foodservice operators to respond, they need to plan features, update prices at the store level and bolster inventories. But by the time those plans are put inaction, the market dynamics may have changed. For now buyers are sitting on the sidelines as they draw down expensive inventory they accumulated in Q1. Will cow slaughter remain high through the summer? Will Australian supplies improve in the second half of the year? These are key uncertainties that the market will have to contend with in Q3 and Q4 but for the moment the weakness in lean beef values has clearly unsettled processors and importers with inventory and their bids for June and July deliveries."
Indicator Aust/NZ 90CL was quoted at US300c/lb FOB East Coast.
Grid rates meanwhile are largely unchanged as all players await the outcome of the current unfolding weather event in Qld. 4-tooth ox remain at 775-780c/kg and heavy cow at 715-720.
So far only isolated holes have been reported in kill schedules.
Processors seem resigned to the prospect of some lost time and the railways have reportedly closed the northern line until Thursday as a precaution.
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