Monthly beef exports exceed 100,000t for the first time since 2019

Department of Agriculture reported 102,351 tonnes to all destinations in August and 98,713t in September.

The August result was significant as it is the first time since 2019 that monthly beef exports have exceeded 100,000t.

Some of the 5000t increase on previous month July would have come from the slight increase in average weekly slaughterings (up from 119,000 per week to 121,000) and the drop in proportion of female cattle in the mix from over 48 per cent in late July to 44pc in late August which would have pushed up average carcase weights.

But it is also likely that the falling Australian dollar, improving trade conditions in the US market and the interplay between the Australian domestic and export markets also played a part.

As was the case last year when exports surged from 75,000t in July to 92,000t in August, the oversupplied nature of the domestic market in July this year had processors once again looking to place product anywhere but domestic. By September however, the dynamics had changed.

Weekly slaughterings had stepped up to 127,000 head (highest for the year) with female proportion a touch lower than August which should have seen a significant step up in September's production levels.

Despite this, beef exports dropped by almost 4000t August to September with all major overseas markets except China taking less product.

This suggests that by September the domestic oversupply had cleared, and with the onset of warmer spring temperatures and barbeques being dusted off, processors were once again seeing some improved placement opportunities in the domestic market.

While this interplay illustrates the importance of Australia's domestic market to its primarily export focused processors, it also shines a light on who we turn to when the domestic channel gets clogged.

This year's August surge was relatively small compared to the 17,000t spike in August last year, but the spread of the extra product across export markets was noticeably different.

Last year it was the US, Japan, Korea and China who each absorbed 3000-4000t of the August spike.

This year the US and Indonesia absorbed most of the increased tonnage with rises of 1800t and 1000t respectively. Korea and China did little more than hold their month-to-month tonnages while Japan lost around 1000t in volume.

China has since recorded an August-to-September rise of nearly 2000t but that only restores volume to where it was in May/June.

Of our major markets, it is only the US that has shown an increase on 2022 levels as well as incremental growth during the current year. Third quarter was particularly strong rising to 25,761t in August compared to 17,305t in March. 2020 was the last time a higher monthly volume was recorded.

Japan started the current year strongly enough with first quarter matching 2022 but by second quarter volume was trending down. March's 20,461t fell to 16,276t in September and on a cumulative basis, 2023 dropped 7pc behind 2022.

Korea got off to a good start in the first quarter establishing a 30pc improvement on 2022 levels but the 19,933t volume for March has not been matched since. Rather, the monthly volumes have seesawed along in a 13,000-17,000t range which has reduced the 2023 year-to-date comparison with same period 2022 back to 16pc.

Like Korea, China opened its 2023 account in the first quarter with good gains over 2022 and while its March volume of 19,958t has been matched, it has not been bettered since.

The US on the other hand jumped from 17,305t in March to 24,430t in September, just slightly down on its August high.

Sitting at third place behind Japan and China on cumulative figures to July, the US leapfrogged both to take the number one slot in August and increased its lead in September with a year-to-date 163,141t, 10,000t ahead of Japan in second place.

Without diminishing the importance of Japan, Korea and China, Australia now appears to be increasingly reliant on the US for take up of increases in available product.

This must be concerning in view of recent Australian announcements heralding significant increases in slaughter throughput soon to come online. The second shift at Dinmore alone could add 8500 head per week and then there are several new and extensively refurbished sheds in the southern states.

With the obvious importance of the US market to Australia at present, it is sobering to read the latest assessment provided by Steiner Consulting.

In summary:

SHORTEST lead time for QLD bookings at present is mid/late November with other works well into December and in places there are reports of space bookings for January.

In south-east QLD across the majors, YP ox are reported at 425-450c/kg and heavy cow at 355-370c. Runs of north-west cattle that normally would have come through earlier are coming through now and there are reports of some very good cattle coming out of the Channels. In contrast the season in the central west is seeing cattle held back which should mean a few for early next year.

In the south, last week's rain has tightened this week's physical markets, but reports indicate processors have plenty of cattle there to work through.

Overseas, trim prices in the US are reported to have eased 15-20c due mainly to NZ kicking in.