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By Matt Dalgleish | Source: DAWR, Mecardo.
Australian beef export figures for the first half of 2019 show the annual trend easing under the seasonal average pattern for the first time this year during May. Lower than average volumes continued through to June as flows to the USA eased, but record consignments to China are persisting.
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Total monthly beef exports for June 2019 came in at 100,050 tonnes swt, a 5% easing on the May figures, to see the last two months register export levels below the five-year average trend. Nevertheless, a strong first four months of the year means that average monthly flows for the first half of 2019 are still trekking nearly 3% above the five-year average levels for the January to June period (Figure 1).
From May to June, US imports of Australian beef declined 13.9% and flows to Japan eased fractionally, coming in a mere 0.8% softer. Australian beef exports to China from May to June dropped slightly too, down 1.6%. However, compared to previous seasons, beef consignments to China are still posting remarkable levels each month.
Indeed, for the January to June period average monthly Australian beef exports to China are running nearly 91% above the five-year trend (Figure 2). A clear signal that ongoing issues surrounding the Chinese pork sector are impacting upon alternative protein supply markets.
The solid demand being experienced for Australian beef product this season from China is continuing to narrow the gap between the beef export market share of the USA and China. In April we reported that China was holding third place in terms of market share on 19.6%, compared to the USA’s second position of 21.8%. Beef export volumes to the half year show that China is closing in on capturing second spot with a market share of 20.7% to the USA’s 21.5% (Figure 3).
Key points
* Total Australian beef exports for June 2019 eased 5% from the May figures.
* Consignments to the USA led the decline amongst the top beef export destinations, dropping 13.9%.
* Chinese demand has remained strong across the first half of 2019 with average monthly flows sitting nearly 91% above the five-year trend.
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What does this mean?
The current issues impacting the Chinese pork industry are not going away in a hurry. Concerns expressed by the United Nations in early July that the African Swine Fever epidemic will continue to spread across China and begin to impact upon neighbouring Asian countries signals more stock losses are to come.
Potential loss estimates in the Chinese pork herd have been touted as high as 50-70% in recent reports and it could take up to a decade for their herd to recover. This suggests that the elevated Chinese demand for Australian beef, amongst other protein alternatives, will remain for some time.
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