… Growth of exports to China has been extraordinary. Our beef exports to China in 2018 - before African Swine Fever - were up 47 per cent on 2017 volumes and the largest annual volume we had ever exported to China. Exports to China for this year to date (August) are up 65pc on last year…
Changing of guard in Australian beef exports
Angus Gidley-Baird, Senior Analyst, Rabobank
via Queensland Country Life (Australia) - 12 Sep 2019
In July and August Australia exported 28,214 tonnes and 26,061 tonnes of beef swt to China respectively, making it Australia's largest export destination for those months. August is only the fifth month in history where Australia has exported more beef to China than the US and only the second month where we exported more to China than Japan.
Growth of exports to China has been extraordinary. Our beef exports to China in 2018 - before African Swine Fever - were up 47 per cent on 2017 volumes and the largest annual volume we had ever exported to China. Exports to China for this year to date (August) are up 65pc on last year.
China is definitely the focus point for global trade in beef at the moment and it's not just Australian exports that have seen a rise. China's total imports of beef have increased over 50pc in the first half of the year, reaching 311,000t. Argentina saw the strongest growth, up 126pc in 1H with 151,000t, narrowly exceeding Brazil to be the largest supplier to China. Brazil supplied 149,000t, and Uruguay 141,000t. Other beef exporting countries which have seen rapid growth in the Chinese market include Canada, Chile, and Costa Rica.
At the moment, the growth in Chinese imports is being supported by strong retail demand. China's retail beef prices remained high through the Chinese summer of 2019, usually the low season for beef consumption. Beef retail prices increased to a record high, at CNY 70/kg in July (AUD 14.52/kg). Such price performance is particularly outstanding, as the whole Chinese economy continues to soften - GDP growth slowed to 6.3pc in 1H 2019, the lowest quarterly growth rate since 1992.
The shortage of domestic pork as a result of ASF will support higher beef prices. Pork prices in China are now on the rise and we are forecasting they will reach record levels early in the new year. But there is only so much beef available in the world and supplies will become more limited. Export values of Australian beef to China up to June show that on a per unit basis China was not the highest-paying market. With a strong focus on forequarter and hindquarter cuts - which together make up almost two thirds of our total beef exports to China, with brisket and shin/shank the biggest export cuts - the average per unit price of exports to China was $9.42/kg. This compares to Japan at $8.05, South Korea at $9.71 and the US at $10.71. The values may increase in July and August when exports to China really accelerated.
But caution needs to be exercised...