HOPES are high that movement from China over barley tariffs might be the catalyst for an end to the red meat processing plant suspensions in place.
There is no question about China's demand for beef being very strong, with the latest government export figures showing almost a 60 per cent jump in volumes to China during March.
Cattle market commentator Ken Wilcock said that was the best result since May 2020 when Australia/China diplomatic relations started to falter.
Episode 3's Matt Dalgleish reported those volumes were nearly 27pc higher than the five-year seasonal average for March.
The return to this level of trade would have to be seen as a positive step towards readmission of suspended plants in its own right but coupled with the barley and coal developments this year, there is strong anticipation of some sort of shift in the status quo in the near future.
Eight red meat processing plants remain temporarily suspended for reasons ranging from labelling and residue accusations to COVID-related issues. Two have not continued with attempts to regain access.
Australian Meat Industry Council chief executive officer Patrick Hutchinson said all appropriate paperwork was with Chinese authorities to facilitate a quick reopening of beef business.
The complete reopening of a market with very large demand for red meat such as China would serve to underpin the ongoing sustainability of processing facilities, allowing them to upscale the value of the product they are both buying and selling, Mr Hutchinson said.
That would assist with cost of living issues in Australia, he said.
"The more customers a processor has, the more ability it has to underpin fixed costs," he said.
"Ensuring total carcase value, which is the number one aim of any processor, requires all possible markets to be open."
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US prices soar
Exports to another of Australian beef's top five markets, the United States, also raced ahead during March, surpassing the five-year average for the month.
While analysts have been pointing to the potential for increased US demand on the back of a lack of cattle supply as ranchers rebuild their herds after drought, US import prices have risen faster and harder than expected.
"The cycle turned very hard and our beef commodity product is attractive in this market at the moment," Mr Hutchinson said.
"Exporters always pivot to send product to the market that will deliver the best returns and there is certainly diversion to the US going on at the moment."
Mr Dalgleish reported the lift in US demand during March represented a 48pc increase on levels traded the previous month.
Mecardo analyst Jamie-Lee Oldfield said global trade dynamics were in Australia's favour and that was occurring when the local industry needed it most, as supply continued to increase.
She said factors to watch out for included a possible dip in US consumer demand because of tightening budgets and Australia's capacity to ramp up processing.
"However, if these conditions can hold up, the outlook for beef exports looks positive this year, which will help support our domestic prices," Ms Oldfield said.
Episode 3's theoretical processor margin model indicates abattoirs have moved into profit territory for the first time since early 2020.
Mr Dalgleish said falling domestic cattle prices and relatively strong beef export pricing offshore had continued to favour local beef processing operations over the first quarter of 2023.
"Historically, according to the average pattern, beef processing margins improve slightly as we head toward May before times get a little tougher during winter with margins often narrowing to their seasonal lows, so there may be more hiccups yet for beef processing before the year is through," he said.