As expected, Australia’s weekly cattle kill has been ramping up this year. Having generally showed week-to-week gains since the beginning of 2023, the eastern states’ kill reached 113,900 head during the first week of April. This is the highest since December 2020.
Year to date, a total of 1.28 million cattle have been slaughtered in the eastern states, 247,000 more than in the same period last year.
The higher kill pushed Australia’s March beef export volume to 99,000t, 33% higher than a year earlier, and the highest monthly export volume in more than three years.
China, the United States and South Korea each took an extra 6000-7000t of Aussie beef, compared to March 2022 – although March 2022 was a particularly low month for beef production in Australia, as processors were battling covid and staff shortages, and were in the midst of herd rebuilding.
It’s too early to tell if Australian beef exports will meet Meat and Livestock Australia’s projected 1.014 million tonnes this year. If they can continue at March’s pace it is achievable, but April is expected to be a low production month due to the number of public holidays.
If Australia’s beef exports can lift back up to 2018-2019 levels of over 1 million tonnes, this means more competition for New Zealand beef in both the US and Asian markets.
This year Japan has been the largest export market for Australian beef, taking 22% of exports, followed by China and South Korea, which have each taken 20%. The US is in fourth place with a 17% market share.
Historically, the US has been a larger market for Australia. However, for the past two years, with Australia being in a rebuild phase and the US in a liquidation phase, Australia’s beef exports to the US declined.
That meant NZ became the larger beef supplier to the US of the two countries, whereas as it was only in that 2019 Australia’s sales into the US were more than double what NZ supplied.
As the Australian cow kill is expected to start rebounding this year, the US will more than likely become a bigger market for Australia again, which will lead to NZ beef facing more competition, likely limiting the prices we are able to receive to an extent.
Some of this will be contingent on how much extra beef China is willing to take from Australia. Earlier this year the relationship between Australia and China was beginning to thaw after a spat between the two countries led to some beef plants being de-listed from accessing the Chinese market
Last year, Australia and the US combined provided almost 80% of Japan’s 560,000t beef imports, both supplying around the same amount.
If weather conditions allow, the US is expected to move into a herd rebuilding phase within the next 18 months. This is expected to limit US beef production and beef exports, and Australia will be in the position to fill the gap into Japan. Japan is a smaller market for NZ; it has taken just 6% of NZ beef exports so far this season.
While Australia’s successful herd rebuild has provided a boost to exports, the lift in bookings at the processors has put downward pressure on slaughter prices. The lower slaughter prices, along with an increase in younger cattle at the saleyards, have impacted store cattle prices as well. This week the Eastern Young Cattle Indicator was sitting at AU$6.84/kgCW, down AU$2.17/kg, or 24%, on where it was at the start of 2023.
This article was written by AgriHQ analyst Haley O’Driscoll. Haley’s reports provide key insights into what makes our sheep and beef markets tick. Subscribe to AgriHQ reports here.