Australian Beef Exports To Japan And Korea Fell In 2007
Japan/South Korea
Australian Beef Exports To Japan And Korea Fell In 2007
According to Meat & Livestock Australia (MLA), Australian beef exports to Japan in 2007 fell 6.9 percent to 377,864 mt.
“The fall was largely due to the high Australian dollar, competition from U.S. and buyers’ unwilling to cover the rising cost of producing grain-fed beef,” according to the MLA.
Australia has experienced severe drought conditions that have caused a decline in cattle numbers and slaughter weights and an increase in feedgrain costs. On average, the Australian dollar appreciated 11 percent against the U.S. dollar in 2007 and 13 percent against the Japanese yen.
The grain-fed cattle industry is almost all dependent on exports to Japan and many Japanese meat companies have invested in grain-fed operations in Australia. High grain prices – a 49 percent climb in wheat and a 53 percent increase in sorghum prices – now threaten those investments and may result in less Australian grain-fed beef competing with U.S. product in Japan. Australian cattle on feed fell 22 percent in the third quarter of 2007 compared to 2006 and the number is expected to decline further.
Most Australian beef exported to Japan is sold as a full set or a set of cuts. The drought has forced prices up as much as 15 percent, which particularly affects sales of full sets, since it forces Japanese buyers to compensate for their reduced profitability by raising their prices on less popular cuts such as loins. USMEF-Japan is now promoting U.S. loin cuts to its key hotel and meat purveyor clients. U.S. loin cuts are being offered at prices that are now very close to Australian prices, USMEF is emphasizing the quality of U.S. loins to white-tablecloth restaurants and hotels. Educational seminars, joint consumer activities with key hotels and intensive customer contact efforts combine to help increase U.S. beef sales.
Chilled Australian beef shipments to Japan in 2007 fell below 200,000 mt for the first time in four years. Grain-fed volumes fell 10 percent from last year to 171,451 mt, or 45 percent of total exports. Frozen grass-fed beef was the only sector that saw a slight growth, “owing to lively sales in the Japanese fast food sector and a shift in buying towards lower price cuts,” according to MLA.
Meanwhile Australia's beef exports to South Korea declined slightly in 2007 (less than 1 percent from 149,660 mt to 148,930 mt). Chilled grain-fed beef exports to Korea, however, increased by 12 percent and accounted for 12 percent of total beef exports. The Australian Bureau of Agricultural and Resource Economics (ABARE) is expecting a 17 percent decline in beef exports to Korea for the 2007/08 period due primarily to lower grain and grass-fed beef production. ABARE also notes the potential for increased competition from the U.S. if Korea reopens its market to U.S. beef in the first half of 2008.
Australia had increased its exports of grain-fed beef in 2004 after South Korea imposed a ban on U.S. beef imports. Retailers were looking to replace chilled, U.S. highly marbled beef. With the resumption of imports of U.S. beef last year, frozen Australian beef imports fell due to U.S. competition and a strong Australian dollar, but Korea closed its borders to U.S. beef again in October.
USMEF-Korea expects the volume of Australian sales to Korea in 2008 to be heavily dependent on when and under what conditions the market reopens to U.S. beef.
Australia's beef exports to all major markets are expected to decline in the 2007/08 year, including a 4 percent reduction in exports to the U.S. and an overall decrease of 5 percent.
Australia is not the only major exporter facing high prices and a strong currency. Brazilian finished cattle prices now exceed Australian prices for the first time ever due to tight supplies amid strong domestic and international demand. In early 2007, finished steer prices in Australia were 60 percent above Brazil. The difference vanished in just 10 months, when steers in Sao Paulo increased 70 percent from $1.50 to $2.60/kg carcass weight.
Tight global beef supplies, exchange rates, and continuing market access restrictions will continue to impact beef trade during 2008. U.S. beef, however, is expected to remain competitive due to the weak dollar and relatively steady prices.
Japan/South Korea
Australian Beef Exports To Japan And Korea Fell In 2007
According to Meat & Livestock Australia (MLA), Australian beef exports to Japan in 2007 fell 6.9 percent to 377,864 mt.
“The fall was largely due to the high Australian dollar, competition from U.S. and buyers’ unwilling to cover the rising cost of producing grain-fed beef,” according to the MLA.
Australia has experienced severe drought conditions that have caused a decline in cattle numbers and slaughter weights and an increase in feedgrain costs. On average, the Australian dollar appreciated 11 percent against the U.S. dollar in 2007 and 13 percent against the Japanese yen.
The grain-fed cattle industry is almost all dependent on exports to Japan and many Japanese meat companies have invested in grain-fed operations in Australia. High grain prices – a 49 percent climb in wheat and a 53 percent increase in sorghum prices – now threaten those investments and may result in less Australian grain-fed beef competing with U.S. product in Japan. Australian cattle on feed fell 22 percent in the third quarter of 2007 compared to 2006 and the number is expected to decline further.
Most Australian beef exported to Japan is sold as a full set or a set of cuts. The drought has forced prices up as much as 15 percent, which particularly affects sales of full sets, since it forces Japanese buyers to compensate for their reduced profitability by raising their prices on less popular cuts such as loins. USMEF-Japan is now promoting U.S. loin cuts to its key hotel and meat purveyor clients. U.S. loin cuts are being offered at prices that are now very close to Australian prices, USMEF is emphasizing the quality of U.S. loins to white-tablecloth restaurants and hotels. Educational seminars, joint consumer activities with key hotels and intensive customer contact efforts combine to help increase U.S. beef sales.
Chilled Australian beef shipments to Japan in 2007 fell below 200,000 mt for the first time in four years. Grain-fed volumes fell 10 percent from last year to 171,451 mt, or 45 percent of total exports. Frozen grass-fed beef was the only sector that saw a slight growth, “owing to lively sales in the Japanese fast food sector and a shift in buying towards lower price cuts,” according to MLA.
Meanwhile Australia's beef exports to South Korea declined slightly in 2007 (less than 1 percent from 149,660 mt to 148,930 mt). Chilled grain-fed beef exports to Korea, however, increased by 12 percent and accounted for 12 percent of total beef exports. The Australian Bureau of Agricultural and Resource Economics (ABARE) is expecting a 17 percent decline in beef exports to Korea for the 2007/08 period due primarily to lower grain and grass-fed beef production. ABARE also notes the potential for increased competition from the U.S. if Korea reopens its market to U.S. beef in the first half of 2008.
Australia had increased its exports of grain-fed beef in 2004 after South Korea imposed a ban on U.S. beef imports. Retailers were looking to replace chilled, U.S. highly marbled beef. With the resumption of imports of U.S. beef last year, frozen Australian beef imports fell due to U.S. competition and a strong Australian dollar, but Korea closed its borders to U.S. beef again in October.
USMEF-Korea expects the volume of Australian sales to Korea in 2008 to be heavily dependent on when and under what conditions the market reopens to U.S. beef.
Australia's beef exports to all major markets are expected to decline in the 2007/08 year, including a 4 percent reduction in exports to the U.S. and an overall decrease of 5 percent.
Australia is not the only major exporter facing high prices and a strong currency. Brazilian finished cattle prices now exceed Australian prices for the first time ever due to tight supplies amid strong domestic and international demand. In early 2007, finished steer prices in Australia were 60 percent above Brazil. The difference vanished in just 10 months, when steers in Sao Paulo increased 70 percent from $1.50 to $2.60/kg carcass weight.
Tight global beef supplies, exchange rates, and continuing market access restrictions will continue to impact beef trade during 2008. U.S. beef, however, is expected to remain competitive due to the weak dollar and relatively steady prices.