Tight supply and record-high cattle prices, at a time of out of the ordinary global trade patterns, has prompted some changes to Australia’s beef export flows. In the new order of things, South Korea has leapt over both China and the US, to take the spot of our second-largest beef export destination so far in 2021.
Since July last year, supply of Australian beef to our export customers has been bound by the low herd and competing forces of restocking intentions. In the second half of 2020, monthly beef export flows averaged 12% below the five-year seasonal average. As tight supply intensified in 2021, beef export volumes have diverged further from normal seasonal patterns. In the first quarter of 2021, 18% less Australian beef was shipped overseas than the five-year average, and 24% below quarter one in 2020.
So which countries are missing out on Australian beef? Exports of beef to China were showing some signs of recovery in recent months, moving towards average levels. However, April saw an unseasonal 28% month on month decline in beef export volumes to China. The volume of beef shipped to China in April was 26% below the five-year average level for April. The cost of our high-priced beef is evidently impacting market share in countries such as China. While our volumes into China have fallen, the US, Brazil and Uruguay are now competing strongly in this market. This factor looks set to continue with China approving 31 new US processing plants for export, beef central reported this week. Exports to two of our other key markets, the US and Japan, also declined in April, however, this isn’t unusual for this time of the year.
There was one stand out destination – South Korea. In fact, for 2021 so far, South Korea has been our second largest customer by volume, having overtaken both China and the US. This was helped of course by declining volumes into China and the US, but beef exports to South Korea in the first quarter of 2021 were 4% higher than the same period in 2020.
What does it mean?
While we never like to lose market share, as we’ve seen in other commodities, when one door closes another usually opens. With the US focusing on supply to China, there was room for Australian beef to fill the gap in South Korea. At a time when global trade flows are anything but normal, the diversity of Australian red meat export markets has proved invaluable.
Key Points
- Australian beef export volumes were 18% below average in the first quarter of 2021.
- South Korea has overtaken the US and China as our second-largest beef customer by volume.
- Over 50,000 tonnes swt of beef has been sent to South Korea year to date.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: DAWE, Beef Central, Mecardo
