Australian Beef Exports in May Climb Back to Previous Year Levels, Further Upside Ahead as Production Recovers

Published 2022년 6월 7일

Australian beef and veal exports surged by 30% MoM and 5% YoY in May. Cattle slaughter and beef production are still considerably behind historical numbers but expected to increase as the year advances.

In May 2022, Australian beef and veal exports climbed by 30% MoM and by 5% YoY to 79,995 mt, their highest level since September of last year. Exports had their first YoY increase since last September, as well.

The bulk of the MoM increase in exports was driven by Asia. Exports to Japan increased by 11,739 mt to 25,606 mt, exports to South Korea increased by 2,562 mt to 13,220 mt, while exports to China increased by 1,869 mt to 13,599 mt. In annual terms, the bulk of the increase was also driven by Japan, where exports grew by 3,741 mt, followed by Canada, up by 556 mt, and Saudi Arabia, up by 453 mt.

One of the main drivers of exports is beef production. End of May data from Meat and Livestock Australia (MLA) showed that cattle slaughter figures in week 22 of the year were slightly above those seen in the same week during 2021. While cattle slaughter is still considerably behind historical levels, the most recent data from the Australian Bureau of Statistics showed that cattle slaughter in Q1 2022 dropped by the slowest YoY pace in two years. It's also worth noting that the average beef produced per unit slaughtered continued to improve during Q1 2022, with an average yield of 324 kg per unit, the highest level on record. Cattle slaughter is expected to increase overall in 2022 by 4% YoY, as the herd rebuilding process progresses, and above average rainfall continues. Read more about it here.

Additionally, exports were supported by a weaker Australian dollar, which in May 2022 averaged its lowest monthly level against the US dollar since July 2020.

Source: Tridge, Australian Department of Agriculture, Macrotrends

YTD 2022, exports were still down 9% YoY, with losses in South Korea, Indonesia, and Japan; more than offsetting gains in Canada and Thailand. May’s surge managed to slow the YoY decline for YTD numbers, as Jan-Apr 2022 figures were down by a greater magnitude (12%).

Source: Tridge, Australian Department of Agriculture

Australian beef exports have been subdued due to the ongoing herd rebuilding process that started in 2021, after the country experienced a severe drought during 2017-2020. The situation was aggravated due to labor shortages caused by the pandemic and a series of floods earlier in 2022. Nonetheless, as Tridge reported previously, the outlook for exports looks brighter, as cattle slaughter is expected to return to 2019-2020 levels by the end of this year.

According to World Bank data, Australian beef prices averaged $6.09/kg in May, down in monthly terms for the second consecutive month, but still trading near March’s record high of $6.25/kg. Beef prices could find support from strong global demand, which is expected to increase this year as markets recover from the pandemic, and a tighter global supply driven by labor shortages, logistical disruptions and unfavorable weather. However, there are some bearish factors to take into consideration, such as the possibility of red meat substitution by consumers driven by inflation.