The outlook for Australia’s best beef customers

Australia’s beef market is a complex web of countries, quality and price. See which nations are most important for our beef exporters.

Australia’s beef market is a complex web of countries, quality and price.

While our nation has a reputation for producing some of the world’s highest quality beef, it’s not always as simple as that to maintain market share.

International competition, trade and non-tariff trade barriers and political decisions can turn beef sales on their head in a heartbeat

The Weekly Times spoke to Meat and Livestock Australia global market analyst Tim Jackson about the key markets for Australian beef.

Meat and Livestock Australia global analyst Tim Jackson.

UNITED STATES

The US is a critical market, both as a buyer of and a competitor to Australian beef.

Years of drought have meant the US herd is at its lowest level for decades, and production is starting to decline as a result. But even with smaller production, the female slaughter rate continues to sit above 50 per cent this year, showing the US herd is not in a rebuild phase.

Over coming months and years, US production will continue to be limited as the herd rebuild starts to gain momentum.

The implications for Australia are two fold.

First, there is a lot of unmet American demand for beef. Even as the US herd continues to be sold off, more Australian beef is going into that market to make up the shortfall. August export figures were up 70 per cent year-on-year. Australia has a long history of supplying the US, which should stand us in good stead. As the price of US-produced beef increases on the back of a supply shortage, it drags up the price of imported beef.

The US is also a major competitor with Australia on the global beef market, including in the key destinations of South Korea and Japan. When US beef exports decrease, Australia has an opportunity to make up any shortfall in markets where we have a foothold.

JAPAN

Exports to Japan have been softer this year than in the past.

Once Australia’s biggest market, Japan has been hovering in the top five for decades but increased beef supplies, particularly from the US, have taken away from our market share.

There is a large amount of beef in cold storage in Japan at the moment. This could take some time to clear out. There are reliable figures on storage amounts but not on country of origin, but it is likely that much of it has come from the US. This storage is affecting import demand.

Currency issues have also influenced the Japanese market. As the US dollar has remained high, it gives less buying power to Japanese importers, and this could be affecting the flow of beef.

SOUTH KOREA

Another market targeted by the US is South Korea, which has been a solid supporter of Australian beef in the past.

That is not to say that Australia has been pushed out of the way, with exports to South Korea in 2022 unusually strong. Relaxing of import tariffs has aided this and it appears that after a couple of years of lower imports and a bumper result last year, South Korea will revert to a more normal buying pattern for Australian beef.

Unlike Japan, there is no clear information on the levels of beef in cold storage but the market looks solid.

CHINA

It is more complicated trying to predict the potential of the Chinese beef market, as there are a number of different factors in play to countries where the situation is more clear cut.

China is the only of Australia’s major customers that imports beef from South America, as Japan and South Korea don’t take any and the US only very small amounts. Exports from South America have been strong into China this year.

Another factor is how the nation’s consumer sector will bounce back after Covid restrictions earlier this year. A lot of analysts expected the bounce back to be bigger than it has been, so consumer sentiment and spending power will be an important factor in Chinese beef demand.

Demand for higher quality Australian beef has been slightly lower than expected, but it appears China will buy – at a price. As a price-sensitive market, when rates come down, it’s expected China will buy more of our beef.

INDONESIA

While the focus of the Australian cattle industry often centres on live export to Indonesia, there is a growing trade in frozen boxed beef. This was before the recent difficulties in sending cattle by live export emerged this year.

Boxed beef sales are expected to keep growing as Indonesia becomes wealthier, the cold supply chain develops and households want to try different proteins.

To date this year, Australian exports of boxed beef have been the highest since 2018.

In August, about 7800 tones of frozen beef was exported to Indonesia, up 70 per cent. And while that’s just about 7 per cent of a total of more than 103,000 tonnes, it is an emerging market with potential to grow.

OTHER SOUTH EAST ASIA

Vietnam, Philippines, Malaysia, Thailand

These countries all import steady amounts of Australian beef, with volumes ebbing and flowing. To date this year, exports have been up 22 per cent to Thailand and 4 per cent to Vietnam, but have been flat to the Philippines and lower to Malaysia.

Overall sales to South East Asia have been steadily increasing, with movements in what each country takes, switching between frozen and chilled beef, and grain-fed and grass-fed product.