Cattle markets remain driven by beef export markets. While the volume figures for March remained strong, price rises are done for now, with some resistance showing up. A trend lower with beef export prices isn’t good news for cattle values.
Beef exports continued to follow the seasonal trend upwards in March. Australia exported 74,348 tonnes of beef in March, improving 25% on February, but down 11% on 2021. January is generally a weak export month due to holidays, while February is only 28 days long, hence the usual trend is for rising exports into March.
Figure 1 shows 2022 is following the seasonal trend, and the decline on last year fits nicely with slaughter rates, which spent the first quarter below last year’s levels.
Japan continued to dominate the beef export market, taking 27% of Australia’s beef exports, and the same amount as last year, but the other three major markets are shuffling their share around. China moved into second place in March, taking just 1% less beef than 2021, and a 19% share of Australia’s beef. Figure 2 shows that for the first quarter China have held onto second place, just a head of South Korea, which had the largest year on year decline in exports, down 16% on 2021.
The other biggest declines were in some of the smaller markets, where it looks like they can’t keep up with the prices offered from China and the US. Indonesia took 36% less beef than March 2021, while the Phillipines were down 28% and Taiwan 29%. All three markets are a reasonable size, taking 9% of Australian exports between them. (figure 2)
Figure 3 and 4 shows 90CL beef export prices to the US have eased since mid-March. Prices are still very strong, at close to 900¢/kg swt, but down 7% from the peak thanks to falling US prices and a rising Australian dollar.
Steiner are reporting massive cow slaughter numbers in the US due to drought and high fodder costs. The herd liquidation is running hot, and keeping a lid on lean beef prices, but it doesn’t bode well for calf and grainfed cattle supplies in 2023 and 2024.
What does it mean?
Rising beef export prices seem to be seeing more beef going to major markets, and less to smaller markets early in 2022. The good news is the demand for our beef is likely to remain strong when supplies increase, but prices may have to ease a little to meet the demand in some of the smaller market.
Key Points
- Beef exports followed the normal seasonal trend in March, rising strongly.
- Exports were well below 2022, with smaller markets down the furthest.
- Prices for exports are down, but there will be plenty of support in the medium term.
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Data sources: ICS, Mecardo
