By Matt Dalgleish | Source: MLA, Livecorp, Mecardo.
Since July 2018, monthly live cattle export volumes have been running above the five-year seasonal average and October saw the highest monthly volumes recorded in three years, at over 120,000 head sent offshore. This article looks at where the growth in demand has come from in the last few months.
Average seasonal movements in live cattle export volumes demonstrate that peaks in the trade are most common during Autumn and early Summer, often with a lull over Winter. This is identified by the seasonal cycle displayed by the ten-year average pattern in Figure 1.
Monthly live cattle export volumes for the 2018 season had been following the ten-year trend reasonably closely for the first half of the year. However, since July, there has been a marked increase in volumes. The first half of the season saw monthly volumes average just 4% above the ten-year trend but since July this has lifted to 33% above the long-term pattern. In October 2018, live cattle flows surged to 47% above the ten-year October average, breaking beyond the upper boundary of the normal seasonal range, to see 123,928 head of cattle go offshore.
Analysis of the top three trade destinations for Australian live cattle exports helps to explain the turnaround in volumes sent since July. The first half of 2018 saw average monthly export levels to Indonesia, our top destination at 56% of the market share this season, running 14% under the long-term seasonal trend. However, higher than average flows during this time to Vietnam and China helped to offset the lull in the Indonesian trade (Figure 2).
In contrast, the season since July 2018 has seen a re-emergence of the Indonesian trade volumes with monthly average levels running 55% above the long-term trend. The trade to Vietnam and China also expanded, at 120% and 116% above their respective ten-year average seasonal patterns.
Read some of our previous live export articles on the links below
No surge in live cattle trade to China - yet
A cut in China livestock tariffs a big deal, or not
No news is good news
Key points
* Since July 2018, live export volumes have expanded, running 33% above the long-term seasonal average pattern for the July to October period.
* Subdued trade to Indonesia over the first half of 2018 was offset by growth in volumes to Vietnam and China.
* Indonesian trade volumes have recovered since the middle of the year and further expansion in volumes to Vietnam and China have seen the October live cattle volumes peak at nearly 124,000 head.
What does it mean?
Focusing on the long-term seasonal trend in the trade of live cattle to China (Figure 3), we can see that it is not uncommon to see live cattle export volumes experiencing a spike as we head toward the end of the year.
Assuming this season follows the average pattern and demand from China remains firm, this could see another 20,000-30,000 head making their way there before the end of 2018. If this eventuates, it would mean that the annual volumes to China would eclipse the record set in 2014 of nearly 118,000 head.
In recent years the prospect of significant demand growth for Australian live cattle into China has been often suggested, but the surge in numbers haven’t yet met the predictions. The 2018 season has shown some promising signs and if we finish the year strongly it might be the signal that we’re on the launchpad.
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