Beef exports rebound but volumes remain low

Despite this rise, the result is still more than 32,000t behind same month last year - which is down more than 28 per cent.

The big difference is that drought last year was pushing cows into the kill at the rate of 56-58 per cent of total slaughter. While this year - in many locations - every effort is being made to rebuild breeder numbers.

Regrettably, a change in Australian Bureau of Statistics collection and reporting procedures means no monthly data was released since June this year about slaughters and beef production - and there are only quarterly reports, with a two-month delay going forward.

Generally, September is pretty much the low point in slaughter numbers in the second half of the year and usually followed by a V-shape recovery, as happened this year ahead of the run-down to the Christmas closures.

What that rundown looks like this year remains to be seen.

With Townsville's Stuart plant already closed for the year; short weeks in some central Queensland works; and a day-by-day proposition to fill reduced shifts in southern Queensland, it will be the extent of flow of cattle in the southern states that drives production and exports for the remainder of the year.

To that extent, the announcement by the Victorian government last Sunday of full removal of workforce capacity restrictions on Victorian meat processors is welcome news.

Two-thirds capacity restrictions were put in place in August as a consequence of abattoirs emerging as COVID-19 'hotspots'. These were partially eased in late September as progress was made in containing the outbreak.

On a year-to-date basis, the October result takes Australia's export volume to 874,418 - which is a drop of 135,000t from same period last year.

At that point in 2019, exports already totaled more than one million tonnes - a level we will only scramble to this year by the end of December, and pushing this year's deficit on last year out to about 200,000t.

Of the 9000t increase in October volumes, most was taken up by our three major Asian markets.

Korea led the way, with 13,829t in October. This was a rise of more than 3000t on September's low point.

All up, this year's volume to Korea currently trails last year by 5 per cent. But that can be expected to drop to about 4 per cent, with the typical increased volumes that go to Korea in the months of November and December.

Considering the supply, price and tariff advantages the US has over Australia in this market - particularly since resuming full production following the COVID-19 setback there earlier this year - it was thought the US would post some serious gains at Australia's expense.

But latest US Meat Export Federation (USMF) figures to September show that, like Australia, the US volume of sales to Korea is trailing last year's result.

To September, it amounted to a fall of just under 6000t - or 3 per cent - while Australia in the same period was 6800t - or 5.7 per cent behind.

That said, there may be some devil in the detail, with the USMEF claiming that Korea's imports of chilled US beef were at a record pace throughout September - increasing 15 per cent from a year ago, with market share climbing to 64 per cent.

While not quite as consistent as Korea, trade with Japan has nevertheless remained reasonably stable.

Tonnages were strong in the first half of the year, with the progressive total to May slightly ahead of last year.

In the second half, volumes eased back a notch or two - but remained consistent month-on-month.

October - at 22,371t - is the biggest volume since May and represents an 1800t - or 9 per cent - increase on September.

But on a year-to-date basis, trade this year trails last year by 21,000t. This is a fall of almost 9 per cent.

In contrast, US trade with Japan is also down, but only by 8000t - or 3 per cent - to the end of September.

China, meanwhile, appears to have applied the brakes and arrested the free-fall in beef imports from Australia that has been occurring since May.

Over the space of only four months, volumes dropped from 24,000t to just 10,000t.

October's 12,640t is a welcome turnaround, considering the five plant suspensions that are still in place.

Unfortunately, the feeling from one of the affected processors on that score is that there is little likelihood of any change in the foreseeable future.

Already 63,000t - or 27 per cent - behind last year, current indications are that, by December, Australia will have a drop in volume of more than 100,000t year-on-year in the China market.

An almost similar month-by-month drop has occurred for Australian product in the US market - but without the magnitude of the year-on-year result in China.

Since June, volumes to the US have dropped from 26,000t to just 14,486t in October.

But the story is not as bad as it may appear, as the 26,000t figure was an extraordinary spike in demand caused by massive loss of processing capacity in the US in the early stages of COVID-19 spread.

April volume prior to the spike was just 15,000t.

On current indications, the US market for 2020 will be down by about 35,000t on the previous year.

The start to the southern seasonal run of export-type cattle noted in last week's column is gathering pace, with some excellent quality heavy steers and bullocks coming forward.

Wodonga last Tuesday had more than 400 of this description - which sold 3-6c/kg dearer and reached 430c/kg live.

At a modest 54 per cent dressing, the average dry weight (DW) equivalent for the big sample of heavy steers worked out at 730c/kg.

Monday's markets at Pakenham and Wagga this week followed on, with good numbers of male cattle - and the latter also presenting 600 well-finished heavyweight cows. These firmed marginally to average 316c/kg live.

Published grids in the south remain unchanged, at 635c/kg for four-tooth ox and 580c/kg for heavy cow. But tight supply in Queensland has seen updates to grids there.

One of the majors added 10-15c/kg on ox and cow last Friday and another followed suit on Monday, taking southern and central Queensland rates to 680c/kg and 615c/kg, respectively.