August was a good month for red meat exports, with China posting surprisingly strong demand.
There was a significant rise in trade flows for Australian red meat in August as tariff and quota adjustments have worked in our favour in key markets.
Although, more interestingly, the long-term trend in meat protein demand and recent free trade negotiations with India and Indonesia place Australian red meat producers in the box seat to benefit from the growing appetite for meat protein.
For the first half of 2022, total Australian beef export volumes had been running 22 per cent below the trend set by the five-year average beef export flows.
However, the gap narrowed significantly over August amid growth in beef export demand in key markets.
August 2022 beef exports for Australia lifted 23 per cent over the month to sit just 1.5 per cent less than the five-year average level for August.
The Australian beef trade to China showed the strongest percentage gains over August, up 34 per cent, which is an impressive gain considering beef is one of the Australian export commodities placed in the sin bin by Chinese regulators in recent years.
Australian beef flows to Japan – our number one beef export destination – gained 19 per cent over August, but the more exciting trade increase was noted in another northern Asian beef export partner: South Korea.
South Korean beef trade volumes from Australia lifted 22 per cent over August.
Concerns about food inflation in South Korea led the government to suspend tariffs on a range of imported food products, including beef.
In August, 18,386 tonnes of Australian beef were shipped to South Korea, which is the second highest month on record, only bettered by the 19,797t in November 2016.
The US is starting to show signs of life, too, with Australian beef export volumes from Australia lifting 28 per cent in August.
There had been large volumes of Brazilian beef entering the US market in 2022 after the South American country regained access for fresh beef product in February 2022.
By the middle of the year, however, Brazil had maxed out its beef quota.
Now that it’s outside the quota for the rest of the season, Brazilian beef into the US will attract a 26.4 per cent tariff, and should lift the competitiveness of Australian and Kiwi beef exports to the US.
Sheep
August was a solid month for Australian sheep meat exports, with total lamb exports reaching a record high for August at 26,296t.
Demand from the US for Australian lamb has grown significantly in recent years.
Lamb exports to the US are running 27 per cent above the five-year average pattern for the year to date.
For the same period last season, flows to the US were 23 per cent above the average trend.
Australian mutton exports to China for August 2022 are also showing some good gains.
It’s not unusual to see mutton export volumes lift from July to August.
However, the strength in Chinese demand has pushed the monthly flows to levels at the upper end of the normal range expected for August.
Normally from July to August, mutton export volumes to China would lift by around 60 per cent.
However, this August, mutton flows lifted by 125 per cent from July levels, which is a particularly good sign for Australian mutton producers and exporters.
Current mutton export levels to China for August sit 41 per cent above the five-year August average level.
The Organisation for Economic Co-Operation and Development (OECD) publishes meat consumption levels and forecasts to 2029, on an annual kilogram-per-capita basis, across a range of meat types.
The projected increase to total meat consumption (across beef and veal, pork, poultry and sheep meat) for the OECD countries listed highlights some good growth opportunities with some of Australia’s key trading partners.
India and Indonesia, with which Australia has recently signed a free trade agreement, have forecast growth in meat consumption of 13.3 per cent and 11.2 per cent, respectively.
Meanwhile, China (which remains a key trade partner despite diplomatic tensions and trade disputes) has forecast meat consumption growth levels of 13.1 per cent.
• Matt Dalgleish is a manager of commodity market insights at Thomas Elder Markets (TEM)
