From the UK to China, what's happening in beef's global markets

The Brazilian Government declared last week that they were foot and mouth disease free without vaccination. While a self declaration won't change the status quo overnight, this is the start of a strategy to argue for access into Japan and Korea where they are currently excluded.

They will apply to the World Organisation for Animal Health in August with a possible decision by May 2025. A successful outcome would have implications for Australia.

Japan's beef imports were steady in the first quarter this year as sharp increases from Australia and New Zealand offset reduced imports from the United States, Canada and Mexico. Chilled imports from Australia were up 42 per cent, particularly chuck and round cuts.

The US Meat Export Federation says Australian chilled beef prices were down 6pc in March year-on-year with frozen prices down further, giving a competitive edge against higher US prices inflated by tighter supplies and a strong US dollar.

The continuing devaluation of the Japanese Yen against the US dollar has all concerned. Among other things it means imported meat in Japan is more expensive and/or returns in Australian or US dollars are reduced. The Yen is at its weakest in 34 years.

The Free Trade agreement between NZ and the EU came into force on May 1.

Australia's FTA with the EU of course is still stalled.

An unhappy NZ meat industry says the agreement is "not commercially meaningful" for beef or sheepmeat.

NZ already has 125,770 tonnes of duty free sheepmeat access to the EU which they have been unable to fill due to Chinese demand. The EU agreement gives them a further 38,000 tonnes with split quotas for fresh and frozen, something that Australian negotiators have strongly opposed.

Australia's current sheepmeat quota access to the EU of just 5851 tonnes seems paltry by comparison, especially when Australia now represents more than 50pc of world trade in sheepmeat.

As of May 6, Australian exporters had already used 1760 tonnes, or 31pc, of that access.

The changing global dynamics of the world's two major sheepmeat exporters, Australia and NZ, was readily apparent last week when StatsNZ announced that NZ's sheep flock had fallen a further 3pc to June 2023 to just 24.4 million sheep following a 2pc drop the year before. This from a flock of over 70 million in 1982.

StatsNZ reported this is in response to reduced land given to pasture and better returns on forestry and other agriculture.

The uncertainty of any export market was on display over the last 2 weeks in the US as bird flu (H5N1) was detected in US dairy cattle. Culled dairy cattle are an important source for the US ground beef market.

The strong import market suddenly took a breath just as the spring grilling season was getting underway until US authorities had completed tests on ground beef in the 36 states that had reported bird flu in dairy cattle, finding no trace of the virus.

Australia remains the single largest supplier of imported trimmings at present (35pc) for the US ground beef market.

We have previously reported on the growing concern by US importers that the labor contract covering US east coast ports is set to expire on September 30.

Those ports take 80pc of Australian beef imported into the US.

The head of the union representing workers, the International Longshoremen's Association, stated that ILA members would not work past the September deadline if a new contract was not in place.

Since trade relations with China began to thaw last year the reinstatement of the final eight suspended Australian processing plants has been anticipated. Six months later and there is no public advice to date.

Meanwhile, China has lifted its ban on German beef after issues around BSE were resolved. China has also approved another 24 beef processing facilities in Brazil and even added a couple of US beef facilities recently.

As of May 1, beef imports from the EU into the UK are subject to physical checks after decades of free and open access as co-members of the EU single market. UK importers warn that import costs on EU meat imports will rise.

For Australia, the EU is now competing on a level playing field in the UK for the first time in living memory.

Scotland confirmed a case of "classical" BSE last week. No trade implications yet.

National cattle slaughter levels reached 136,946 head last week, the highest since 2021 as the recent influence of adverse weather patterns and public holidays on logistics and throughput finally receded for a full kill week.

Beef exports for April were up 46pc from last year in concert with the higher throughput and with the US leading the way. Prices were reported as generally steady to firmer especially for heavier steers and processor cows.

Reports of increasing numbers of slaughter ready cattle out of north west Queensland, the Northern Territory and Central Australia as the weather has cooled and after a lot of rain, had some processors contemplating extra processing days.

Southern state processors have also been increasingly reported operating across the north to augment higher slaughter levels in the south as drier conditions in Victoria and South Australia eventuate.

Year-to-date slaughter is still 23pc above the same time last year, higher in Victoria.