FIGURES released last week by the Department of Agriculture show beef exports ending the 2023 year on a strong note taking volume for the full year beyond expectation.
December experienced one of the strongest end-of-year surges seen in many years with volume rising from 93,000 tonnes in November to 106,724t.
This took cumulative volume for the 2023 calendar year to 1,082,405t, a significant turnaround on 2021 and 2022 when export volumes were just 887,000t and 854,000t respectively.
Those years were the core of the rebuild phase and a period of heavy losses for the processing sector in consequence of supply driven high prices for both immediate slaughter and feeder cattle. The only comfort for processors at that time was certainty that improved supply and lower prices lay ahead because of herd growth.
That phase of the cycle started to emerge in 2023.
From around 108,000 in early February, weekly kill reached 124,000 by early June and went on to 132,000 by late October. A dry pinch mid-year through to October probably accentuated the process. However, the upward supply trend continued despite good rain in November and December with the high point for the year occurring mid-November.
Some processors are hopeful that this will lead into numbers for first quarter 2024.
In a perverse sense it was perhaps timely that the lessened supply of slaughter cattle during those rebuild years coincided with the impact of COVID on supply of labour. Had COVID struck in 2018, it is hard to see how there would have been enough labour to accommodate the drought turnoff of 2019.
Looking closer at the 2023 end-of-year figures, it is apparent that the December surge has a lot to do with timing of shipments to the United States market.
Throughout the year, volumes to the US steadily increased to an October high point of 27,600t before dropping dramatically in November to 19,500t. Past records suggest this is a regular seasonal pattern possibly associated with avoiding arrival of product pre-Christmas when freezer space is scarce due to build up of other foreign product held for release in the new quota year. December shipments for arrival post-Christmas tend to recover in volume.
That was the case in December when US volume recovered from its November low with a meteoric rise to 35,782t.
But interestingly, the average across November and December is 27,600t, same as for the month of October so any suggestion of a continuing upward trend in the final quarter is illusionary.
However, the overall recovery in volume into the US market is certainly not an illusion.
For the 2023 year, cumulative volume was 246,074t, up a massive 84 per cent on the previous year which places the US well ahead of nearest rival Japan as Australia's largest beef export market.
That aside, there is a further dimension to this figure.
Since the massive 415,000t volume to the US in 2015, the 2023 volume has only been bettered once and that was a marginally higher 251,000t in 2019.
The significance is that 2019 was a severe drought-turnoff year while 2023 was not.
This suggests Australia now has cattle (because of the rebuild) and is therefore well placed to supply into the US and those markets that the US will be less able to supply as it recovers from its own liquidation years.
Japan is foremost among the markets Australia could hope to recover some ground.
At 206,802t for the year, Japan is at a low ebb with respect to historical Australian beef imports. Since 2001, there have been 11 years when volume has exceeded 300,000t including two years of over 400,000t.
Korea, on the other hand, recorded a 17pc growth factor in its 188,924t result for the year.
But as has happened in most years since the Korea-Australia Free Trade Agreement came into force in 2014, safeguard was again triggered in 2023.
If, as expected, Australia finds itself in a more favourable supply position relative to the US, increased volume into this market will still be hampered by safeguard.
For Australia, safeguard volume increases by only 2pc per year under the FTA, which puts 2024 at 188,437t.
Triggering safeguard in 2024 will cause tariff on Australian product to jump from 10.6pc to 24pc.
China recorded a substantial 48,000t increase on the previous year with its 206,191t volume for 2023. Reinstatement of the remaining suspended Australian plants would logically assist any further upside, but there is no indication yet on when that might occur.
In secondary markets, the newly minted Free Trade Agreement with the UK, which came into force on June 1, was expected to produce some momentum fairly quickly.
But in seven months of trading activity, cumulative volume has amounted to just 2406t. Discussion with processors, however, indicates there is confidence this will develop into a meaningful market and there is ongoing background effort occurring to get the foundations in order.
Steady start to processing year
WEATHER has made for a steady opening to the processing year as more plants come back to work this week with the odd starting date pushed back to the end of the month.
Grid rates have moved up in consequence of the tightness of supply.
In southern Queensland, YP ox, which were last quoted in December at 460-470c/kg, are now attracting 530-565c from the majors. Heavy cows, which ended the year at 390-400c, are now at 460-480c.
One processor commented they were not getting much enquiry at present, with producers seemingly content for the moment to get a bit more weight into their cattle.
In the meantime, saleyards are seeing increased interest from restockers, particularly for the lighter end of the yearling steers.
At Toowoomba on Monday Angus steers weighing 170kg sold for 550c/kg. This follows on from Roma last week where a sizeable offering of steers in the 200-280kg range sold to 472c and averaged 444c.
In overseas markets, Steiner was upbeat about prospects for improvement in US domestic lean beef prices in the spring and summer. Based on expectation of a significantly smaller US cull cow kill in 2024, this would be good news for imported lean beef but as always, weather will be the crucial factor.