Insatiable Chinese demand creates turning point for beef

THE red hot demand for Australian beef that has helped hold cattle prices up against a backdrop of drought-induced offloading has led to a turning point, the release of new Federal Government export data shows.

For the first time ever, China has taken the crown as Australia’s largest beef market, volume-wise, over a calendar year, on the back of an incredible 84 per cent year-on-year lift.

China accounted for 300,132 tonnes of Australian beef shipped weight in 2019, the Department of Agriculture reported.

Japan and the United States, traditionally Australia’s largest markets, took 287,495t and 250,979t respectively.

Shipments to South Korea added up to 162,344t and Indonesia was also in the mix as a big player at 57,637t. Interestingly, Saudi Arabia took over 12000t, a 35pc lift.

Overall, beef exports for 2019 came in at over 1.2m tonnes, which puts the result in the top three figures of all time, according to Meat & Livestock Australia data.

The rise of China was always going to happen but was propelled by the spread of African Swine Fever which has decimated 40 per cent of China’s pig population and forced the country to look for animal protein alternatives around the world, market analysts said.

Associate director at NAB Group Economics Phin Ziebell said and there had been an upward trend in Australian beef and sheep meat prices in Chinese domestic markets for some time.

“China is a massive country in terms of population and while pork and chicken dominate meat consumption, keep in mind China’s beef market has only been open for less than a decade,” he said.

“But there is no question swine fever has had a massive impact on Chinese meat prices.

“The question will be in five years time once China is back on track with domestic supply, how does Australia keep prices high in that market because ultimately we are not a low-cost producer so we’ll need to retain margins.”

Rabobank senior animal proteins analyst Angus Gildey-Baird said the speed and extent to which volumes to China grew late last year did come as some surprise.

“China’s willingness to pay more for the product attracted volumes away from our traditional markets,” he said.

Late last year, Rabobank data shows China was paying 9.22 per kilogram for Australian beef on average, compared to the US at 9.17, Korea at 8.55 and Japan at 7.98.

That average is obviously affected by cuts – for example Australia sends a lot of brisket to Japan, a lower-value cut.

However, in 2018 Australia’s average price to China was 7.63/kg while the other markets stayed relatively similar, Mr Gidley-Baird said.

The 9pc lift in beef export volumes to the US could be somewhat of a recovery after a decline the previous year, the analysts said.

“In addition, a lot of New Zealand product went to China so Australia possibly made up that difference in the US,” Mr Gidley-Baird said.


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