FOR reasons that are not entirely clear beef exports slumped markedly in September despite slaughter appearing to being maintained throughout the month at levels similar to the month before.
According to DAWR (Department of Agriculture and Water Resources), 91,668 tonnes of beef were exported in September, a drop of 15,253t or 14 per cent on August volume.
Japan suffered the most with exports to that market falling by 5000t from 27,000 to 22,000. The United States was down by 3400t and Korea by 2200t.
While the MLA weekly slaughter figures are not a complete count, their reports do provide guidance as to trend and they show no appreciable difference in kill level between August and September.
However the devil may be in the detail.
We will have to wait until early November for the ABS figures to confirm the September kill but it may be that the answer lies partly in September having fewer working days in the month.
A quick look at the calendar shows that August had 23 working days (Brisbane Show holiday excluded) while September had just 20.
With virtually all production contained within a Monday to Friday spread, three fewer days could mean somewhere around 100,000 fewer cattle processed for the month.
A rough calculation converts that to around 20,000t of boneless product which after allowing for domestic would explain most of the 15,000t drop in export.
Of course there may be other factors in the mix.
September is notorious for drop in condition of cattle after winter and it may be that the grass component of the kill has taken a hit in terms of average carcase weight.
If that explanation is correct then with October containing 23 working days (not allowing for those states with the Monday public holiday) we should see a significant upturn in exports in October provided flow rate of cattle is maintained.
Whether the recent rain in NSW and south-east Queensland will affect flow of cattle remains to be seen.
Meanwhile with only three months to run to the end of the year the overall picture is rapidly taking shape and out of that there are some interesting observations.
At the end of the third quarter Australia’s total beef exports amounted to 840,000t which is up by 87,000t on same period last year, an increase of 11.6pc.
This should see total exports for the year up by well over 100,000t.
Because of the delayed start to herd rebuilding since the liquidation years of 2013-2015, this extra production has not come from increased herd numbers but rather from a relapse back into liquidation, which will undoubtedly have consequences for herd size and cattle availability in the years ahead.
On that subject US-based analyst Steiner published USDA forecast estimates last week on cattle inventory for the major global beef exporting countries.
The article said USDA drew its information from country attaches around the world, which poses some data quality questions but that aside, their view is that the Australian herd will amount to only 25.3 million head as at January 1 next year.
That is 7.7pc lower than the 2016 count and greatly at odds with our own MLA prediction of a 27.95m head herd in 2019.
While continuing dry conditions in 2018 has driven increased numbers of females to slaughter it is also the driver of high numbers of cattle on feed and this has played a part in Australia being well placed to meet growing demand at the quality end of the market.
In particular trade to Japan has stepped up despite strong competition from the US.
The 235,000t exported to Japan so far this year is a respectable 7pc increase on last year and points to a total tonnage for this calendar year in excess of 300,000.
Last time that occurred was in 2012.
The tariff reductions in Australia’s favourable trade agreement have helped to keep Australia competitive against lower-cost US product but that is now under threat with commencement of negotiations for a US/Japan bilateral agreement.
Korea has also been a growth market for Australia this year but as discussed at length previously in this column, prospects are severely limited by a restrictive safeguard volume in our trade agreement.
China on the other hand has been a vital counterbalance to a lacklustre US market and has seen trade with Australia increase by 55pc so far this year.
At 116,000t to end of September, volume has already exceeded the total for the 2017 year and is heading toward the 155,000 record tonnage set in 2013.
As to the US, volume this year is little different to last year.
Steiner commented on Friday that prices for imported beef remain weak as domestic values continue to move lower in a well-supplied market.
A patchy picture
LAST week’s rain and the prospect of more to come this week has lifted spirits but the bigger picture is still very patchy.
In Victoria, Stock & Land analyst Peter Kostos tells me that in places producers are once again dipping heavily into their breeders to lighten off.
In consequence there are plenty of cows in the market at present and prices have dropped substantially over the past couple of weeks.
This trend was confirmed at Wagga on Monday with a good yarding of well-conditioned heavy cows falling by 22c/kg to average 209c. Similar heavyweight but lighter conditioned cows averaged 190c.
Some parts of the Riverina and western NSW picked up useful falls of 20-50mm but agent Tony Coffey at Hay said he has only measured 12 points (3mm) since late June.
In southern Queensland, the rain has had some impact with grid rates increasing by 10c/kg on Monday taking indicator 4-tooth ox to 520c/kg and heavy cow to 450.
In Central Queensland the prospect of tightening supply saw rates jump by 15c to bring them within 5c of southern quotes.
