Australian beef exports have risen on the back of higher slaughter numbers, with China remaining the top destination for the second month. The total of 91,479 tonnes shipped weight was marginally lower than the five-year-average for May of 94,000t. However, it was far higher than previous years, 14% higher than 2022 and 20% over the 2021 volumes. This brings the year-to-date volumes 21% higher than the same period in 2022.
Key Points:
Beef export volumes in May were 14% higher than last year
China remains the top destination for the second month
United States posts the biggest YOY increase with 63% higher volumes than last year
Slaughter levels for the first five months of the year are 24% higher than the same period in 2022. This is a major driver in the 21% increase of year-to-date exports over the same period.
Australia’s top four beef export destinations continue to move closely in line with each other. A trend likely driven by the focus on greater market diversity and Australian production levels impacting each market equally. The only discrepancy was South Korea (15,648t) slipping back to fourth position as the US (17,940t) flew past to record the highest monthly trade volume in over two years. The rise of exports to the US represents a 63% increase year-on-year and a clear sign that the competitiveness of Australian exports is improving.
Meanwhile, China (19,569t) held out in first position with the narrowest of margins over Japan (19,366t). The second consecutive month of strong volumes to China is a positive sign for the prospects of increasing demand as Australian beef production ramps up.
As flagged in our May Cattle Outlook, China became the top export destination for beef in April though it has not been enough to support Australian cattle prices. China’s post lockdown economic revival will be important to watch in terms of whether it will increase domestic demand for protein. It is important to note, however that export demand does not have the power to turn prices around against the weight of significantly higher supply of beef.
A significantly larger cattle herd than in recent years is expected to see slaughter numbers continue to increase. As higher supply keeps prices low, China is likely to continue to increase imports of Australian beef and we could see a similar surge in trade volumes as in 2019.
Exports to China, at just shy of 20,000t, are almost half of the tonnage China took in 2019. That leaves plenty of headroom for continued trade to support Australian cattle prices, but it doesn't mean prices won't drop further.