Australian Beef Exports on the Rise as Cattle Slaughter Grows and Brazil Suspends Exports to China

According to data from the Australian Department of Agriculture, Fisheries and Forestry, cumulative Australian exports of fresh, chilled and frozen beef, including veal, in January and February 2023 rose to 122 thousand mt, their highest level for the first two months of the year since 2020 and representing an 18% YoY increase.

Australian exports of this product in the 2022 calendar year were the lowest since 2003 as the country went through a herd rebuilding process, necessary after persistent drought considerably dwindled cattle numbers in previous years. After the drought conditions eased in 2021, the process was incentivized by favorable weather, which resulted in considerably low slaughter numbers and beef production, which in turn resulted in the decline in exports. Augmenting the decline in production was an insufficient number of workers in the beef processing industry following the Covid pandemic.

However, cattle slaughter is now increasing sharply. According to data from Meat and Livestock Australia (MLA), total cattle slaughter rose 22% year-over-year to 753 thousand head in January-February 2023. Higher slaughter results in higher beef production, which in turn leads to higher exports. Australian exports correlate well with cattle slaughter numbers. Another factor contributing to higher exports is a weaker Australian dollar, which traded for 0.69 US dollars in Jan-Feb 2023, down 4% YoY from 0.72 US dollars in the same months in 2022.

Source: Tridge and Australian Department of Agriculture

All major destinations experienced considerable gains, including China, which received fewer exports from Brazil due to a temporary suspension. In January-February 2023, the destinations with the largest gains were the US, Indonesia, South Korea, China and Japan, which were also the destinations with the largest market share in the same period.

One of the reasons behind the gain in exports to China is that the Asian country imported less beef from Brazil in February, as the South American country initiated a temporary suspension of exports due to the detection of an isolated mad-cow case. Australia’s exports in March could be further boosted by this development, as the suspension is expected to last until the end of the month.

Source: Tridge and Australian Department of Agriculture

The ongoing increase in Australian production, coupled with the decline in US domestic beef production, will likely result in an increase in Australian beef exports in 2023. The USDA forecast Australian beef production to rise by 17% to 2.21 million mt (CWE) in their January estimate, up from 2.20 million mt in its October estimate. It further estimates that total Australian beef exports will rise 21% YoY to 1.53 million mt (CWE), their highest volume since 2019.

Export volume is expected to increase in the upcoming months driven by higher production. January and February are also typically the slowest months in beef exports. According to World Bank data, Australia/New Zealand beef prices fell in January 2023 to a 22-month low, but regained some ground in February to reach a fresh three-month high. Higher export prices and a weaker Australian dollar will also help to boost exports.

In turn, the USDA predicts that US beef production will fall by 7% YoY in 2023 to 12.05 million mt, and exports will fall by 13% to 1.4 million mt, as drought conditions throughout 2022 considerably dwindled its herd numbers. Meanwhile, Brazil’s production is expected to grow by 2% YoY to 10.56 million mt, while its exports are predicted to rise 3.5% YoY to 3 million mt.

All in all, the USDA expects global beef production to remain practically flat in 2023 compared to the previous year, at 59.2 million mt. Likewise, exports are expected to remain practically unchanged at 12.2 million mt.