Chinese demand weakens as global beef heads stateside

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Australian beef exports volumes are at record highs for the first six months of 2024, and the supply and demand dynamic looks to keep them tracking that way for the rest of the year. More than 600,000 tonnes of beef has been exported from Australia so far this year, which is an increase of 20% on the same period in 2023.

About 106,000 tonnes were shipped in June, the highest volume for that particular month since 2015. Our top two markets have upped the ante in recent months, making up for more lacklustre trade to China.

 

As expected, Australia has plenty of cattle to slaughter, and our current biggest market – the US – needs plenty of beef. For the year-to-date, Australian beef exports to the US have lifted 43% year-on-year and are 42% above the five-year-average. The US market share has lifted to 35.8%, again a figure not seen since 2015. And the foot isn’t coming off the pedal in this market, with the Steiner Consulting Group predicting that if the first two weeks of July are anything to go by, US imports of Australian beef will be up 74% year-on-year for the month.

 

The USDA forecasts US beef imports overall will rise 12% in 2024, and their exports will be down nearly 8%. This reduction in exports is also assisting Australia in its other major market, Japan. Beef exports from Australia have lifted 33% year-on-year for January to June, and Japan’s market share is back up above 22% from 19% at the 2023 year-end. On the other hand, the declining demand for beef from China this year is putting extra product into the US market from our competitors. Australian beef exports for the year-to-date to China are 7% below the five-year average, and the June volume was the lowest monthly shipment since February last year.

 

Weaker Chinese demand isn’t only impacting Australia. According to the latest World Beef Report, China took less than 50% of Brazil’s beef exports for the fourth consecutive month in June. To put this into perspective, in 2023 China took 70% of all Brazilian exported beef.  This has meant Brazilian beef exports, despite being out of quota already, are 36% higher year-on-year for 2024 so far, and June volumes were three times higher than the same month in 2023. 

What does it mean?

Strong US demand means the 90CL US imported beef price is also strong, currently 24% higher than year-ago levels and according to Steiner about 26% stronger than 2014 levels – the last record year for Australian beef exports. This high price (and lack of Chinese demand) is encouraging South American countries to continue operating in the US market, despite out-of-quota tariffs being in play.

Demand from the US is expected to further increase, but historically strong supply from both South America and Australia is keeping this price from rising even further. However, any increased demand from China could be the catalyst for further 90CL price increases (and subsequent domestic rises) in the second half of the year.

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Key Points

  • Australian beef exports are tracking 19% above the five-year average for the first six months of the year, and 3% above the record levels seen in 2014.
  • Export demand continues to be driven by the US, which has increased its market share of Australian beef to nearly 26%, its highest since 2015.
  • Despite lifting export bans from five major processors in May, volumes to China are still below year-ago, and average levels.

Click on figure to expand

Click on figure to expand

Click on figure to expand

Data sources: Meat and Livestock Australia; Steiner Consulting Group; Rabobank, Mecardo

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