It should come as no surprise to see Australian beef exports open the year much lower than 2020. With slaughter levels taking a dive early in the year, there is less beef available to export, and it seems the US market is bearing the brunt.
While February beef exports managed to lift significantly on January, they were well back on February 2020. Figure 1 shows total February beef exports were up 35% on January, but down 28% on the same month in 2020. Despite rising compared to January, beef exports were still lower than any month in 2020.
The US has taken the biggest hit in terms of volumes. In February the US took half of what it took in February 2020. This is a good indication that cow slaughter is down, with much of the beef exported to the US being lower quality manufacturing beef.
Japan also had a 25% fall in volumes of Australian beef, which can be put down the fewer numbers of cattle on feed, and lower grainfed cattle turn off.
South Korea was the only country to really maintain its import volumes compared to last year, down just 7%, while China took 30% less beef.
Obviously the lower export volumes have had little impact on local prices, with cattle supply doing all of the driving locally. Lower beef export volumes also seem to have had little impact on export prices.
Figure 2 shows Australian beef exports value, along with the 90CL Frozen Cow Export Beef Indicator. The beef export value only runs until December, and it is the total export value divided by total exports. We can see that the export value in ¢/kg terms managed to maintain its high level in the second half of 2020 despite falling 90CL prices.
Figure 3 shows that export values in $/kg to the US were very strong late in 2020. Value must have been propped up by higher value exports to the US. There are plenty of reports that grassfed beef is finding traction in the US.
What does it mean?
Lower export volumes are a factor of falling slaughter. With the lower slaughter coming largely from a decline in cows, the beef being exported will be higher quality, which explains some why export values defied the 90CL decline in late 2020.
Exports are likely to remain low in 2021, and export values strong. It is of some concern that export values haven’t lifted from 2019/20 levels despite the extreme low supply. When the data for early 2021 comes out we might have seen a rise, and it will be needed to maintain cattle prices.
Key Points
- Beef exports have opened 2021 much lower than last year, with low slaughter to blame.
- Export values have remained at the top of the range but moved higher in the US.
- Export values will need to move higher to maintain current strong cattle prices.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: MLA, Mecardo
