Beef exports are down but Chinese demand continues

Beef exports are down but Chinese demand continues

China was easily the biggest market for Australian beef, taking 33 per cent in November.

China was easily the biggest market for Australian beef, taking 33 per cent in November.

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The Stock Take: Mecardo's Olivia Agar writes about the beef export market.

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Total supply of beef for export declined in November.

Cattle slaughter remained relatively strong through the month, so it was likely a consequence of cattle being on the lighter side.

Despite the November volumes being down 9 per cent on October, they were up 9pc on November 2018. In fact, November exports have only ever been higher once, in 2014.

Declining export volume didn't stop China from taking yet another record amount of our product.

China was easily the biggest market for Australian beef, taking 33pc (Figure 3).

FIGURE 3: Australia beef exports - China. 34.2 million tonnes of beef was exported to China in November, up 12pc on October and 134pc on November 2018.

FIGURE 3: Australia beef exports - China. 34.2 million tonnes of beef was exported to China in November, up 12pc on October and 134pc on November 2018.

With most of the beef exported to China being frozen, it is pulling more and more beef away from the US.

Exports to the US fell 37pc in November, with volumes at their lowest for that month since 2016, back when total supplies were much tighter.

The US share of our exports was 26pc back in November 2016 and just 13pc last month.

This share was the lowest since 2010. By no means is there a glut of beef in the US, they are still very much chasing our exports.

It seems that China simply has more money for beef at the moment.

Both Japan and South Korea managed to maintain their share of our beef exports.

That being said they are generally after more expensive cuts of beef than the products heading to China and the US.

With manufacturing beef prices still rising, there might even be some better cuts going through the grinder.

What does it mean?

We've been following the rising 90CL beef prices over the last month and the rally in price fits nicely with export flows.

The reports of US buyers scrambling for beef in a rising price environment shows up in much more beef going to China and much less to the US.

The market is still waiting for Chinese beef demand to flatten out, and see some sort of equilibrium reached in export markets.

At present, however, things are still highly uncertain.

The story Beef exports are down but Chinese demand continues first appeared on Farm Online.

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