Australian Beef Production and Weaker Currency Boost Beef Exports in H1 2023

Published Aug 25, 2023

Considerable growth in Australian beef production has driven a notable growth in beef exports , while a weaker Australian dollar, favorable to exporters, has also been reflected in higher export volume during the first half of 2023.

According to recently released data from the Australian Bureau of Statistics (ABS), in the second quarter of the year, Australia produced 534 thousand metric tons (mt) of beef, representing an increase of 15% year-on-year (YoY). Cattle slaughter rose also by 15% YoY, totaling 1.68 million heads in the same quarter. Total beef production for H1-2023 was 1.058 thousand mt, representing a 15% increase YoY.

In the meantime, Australia exported 478 thousand mt in H1-2023, representing an increase of 20% YoY. Exports have grown of course because of higher availability of beef, but they have grown at a faster pace than production as demand from abroad has been strong.

In H1-2023, the United States (US) imported 111 thousand mt from Australia. This represented a gain of 26% or 23 thousand mt YoY. In terms of net volume change, Australia experienced the largest gain, to the detriment of exports from Mexico, Brazil, and Nicaragua. Something similar happened in South Korea. In H1-2023, South Korea imported 97.2 thousand mt of Australian beef, representing an increase of 16%. In June alone, beef imports from Australia grew by 46% YoY.

Source: Tridge with Australian Bureau of Statistics data

A weaker Australian dollar compared to the US dollar is also helping Australian exports . In H1-2023, the average AUD/USD exchange rate was 0.67, which represents a decline of 6% YoY. This AUD depreciation, coupled with production growth, almost matches the increase of Australian beef exports. A weaker Australian dollar incentivizes exports as sellers get more local currency for the same price in foreign currency.

It’s worth remembering that 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.

However, as the recent ABS numbers showed, cattle slaughter – which translates into higher beef production assuming now relevant changes in average weights- continues on the rise. As mentioned in previous Tridge analyses, Australian exports correlate well with cattle slaughter numbers and a weak Australian dollar.

Moving forward, exports are expected to continue growing at a fast pace as US and Asian imports remain strong. US imports are expected to reach their highest level since 2005 at 3.512 billion and to grow further in 2024. The main reason behind the anticipated import increase is the expectation of much lower beef production in the US this year and the next due to a significant reduction in the cattle herd. In the meantime, Australian beef production is expected to keep up with the growth shown in H1-2023 and to grow even more in 2024 and 2025.