By Matt Dalgleish | Source: DAWR
Beef export volumes of 90,774 tonnes swt for February 2016 indicate that foreign demand, while softer than the 2015 season, is still within normal seasonal variation and mirroring the longer term average trend.
As outlined in figure 1 total beef exports last month sits 2.5% above the five-year average for February and indicates a return to a more normal season when compared to the solid volumes recorded in the first half of 2015. A closer look at export destinations reveals South Korea to be the star performer out of the top four countries so far this season. Japan continues to demonstrate a lacklustre trend, while China and the US post lower monthly volumes from last year but still remain above their respective five-year averages.
The solid growth in beef exports to South Korea this month is demonstrated in figure 2 with 15,358 tonnes swt recorded, a 26% increase on last February and 30.7% higher than the longer term seasonal average. In comparison the US and China reported a year-on-year monthly drop of 30% and 15.2%, respectively. Despite this softening, US and Chinese beef export volumes still remain above the five-year average for February by 14.5% and 16.6%, respectively.
Contrast this to the ugly duckling of beef exports, Japan. Recent figures reveal a 26.6% reduction in year-on-year monthly volumes for February and it is currently sitting 26.3% below the five-year average. Beef export prices to Japan in A$ terms have softened 9.7% from the recent highs recorded in October 2015. This would suggest increased competitiveness for Australian beef exports in Japan and indicates some other unforeseen factor is behind the weak demand. Perhaps the shock of the Japanese soccer team being bundled out of the Rio Olympics by the Matildas has put Japanese consumers off Australian beef…
Some of the Japanese void appears to have been taken up by other Asian centres, namely Indonesia. As highlighted by figure 3 Indonesia followed up on the surge in beef exports in January with another solid result in February with exports of 5,183 tonnes swt. This is a 20.3% rise from February 2015 and 48.2% above the longer term seasonal average. The Philippines and Taiwan also showed some positive signs with year-on-year monthly increases in export volumes of 83.8% and 42.7%, respectively.
Early beef export figures for the current season indicate a return to a more normal year in 2016. This is in line with forecast declines in beef export volumes, when compared to 2015, on the back of tighter domestic supply.
Despite the subdued demand for exported beef from Japan other countries such as Indonesia, Taiwan and the Philippines have stepped into the void so that total beef export volumes to Asia are sitting very close to longer term average trends.
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