AUSTRALIAN beef and veal export levels contracted seven per cent during the last financial year to just short of 900,000 tonnes shipped weight.
This situation was relevant to factors mostly uncontrollable according to Tim McRae, senior economist with Meat and Livestock Australia.
“Unless they can make it rain and control the dollar…”, he said.
This latter influence was especially significant considering it averaged 88.2US cents during the last fiscal year, or 18pc higher than the previous year.
The situation was also compounded by the “slow and tentatively” recovering global economy which had also heavily impacted consumer demand in Australia’s two major markets – the US and Japan.
Australian beef was therefore costing more at a time when buyers in export markets, especially Japan, were looking to keep prices lower to maintain consumer demand.
90CL manufacturing beef returns from the US market for instance, averaged six per cent higher in USc/pound terms in 2009-10.
But when this figure was converted into the high A$, they averaged 11pc lower.
Prices for this stock did improve however, peaking in April as market signals pointed to recovering demand in 2010 and low beef inventories.
Japan remained Australia’s main export market taking 349,888t swt which was four per cent below last year’s levels.
Demand from the US market suffered a greater contraction, dropping 25pc to 210,514t swt which was the lowest fiscal volume since 1996-97.
Despite unemployment levels and deflation – particularly in Japan – remaining a concern, Mr McRae said the tide had turned following good growth in the US and Japan.
“Those two markets are looking to come out of recession and record some positive figures this year and also in 2011.”
Further improving the outlook was the shrinking global cattle herd and the expectation of rising demand for beef product.
“We are looking at a period of lower beef supplies and … if we do see an improvement in economic conditions globally, there will be a rising demand for beef matched by some pretty tight supplies.”
While the US and Japanese markets had suffered declines, there were positive stories coming out of South-East Asia, Mr McRae said.
Particularly so in Indonesia, the Philippines and Malaysia which took more than 130,000t of beef combined last fiscal year.
This was up 20pc on the previous year and 85pc above the average for the past five years.
Indonesia had the most notable growth with exports surging 31pc year-on-year to a little under 50,000t swt.
Korea also imported 10pc more year-on-year to 123,837t swt, despite an expectation the market would suffer under increased pressure from US imports.
“We are certainly seeing that focus towards South-East Asian markets increasing and combined, they take some pretty significant volumes of beef.”
Further east, Russia was an important prospect and looking more promising following Argentina’s slashing of export volumes.
“We’re looking at Russia becoming a more consistent buyer of our product over the short-term at least.”
Mr McRae said the threat of the US return into Japan remained very real with Japanese imports of US beef up 43pc for the first five months of this year.
While these figures were coming off a very low base – “virtually zero per cent” – Mr McRae did expect this figure to continue to climb.
“The US has a very low dollar at the moment and, being a bit more export-focused, we would expect this figure to increase further and there’s always the possibility of some of the import restrictions being eased.”
During the coming 12 months Mr McRae expected export volumes to improve.
He said volumes had been hit by a double blow from demand, but also, seven to eight months of tight cattle slaughter numbers.
This was due to both lack of numbers which became especially apparent during September and October of 2009, but also due to rain and flood in the first quarter of 2010.
“We should have more beef and should see demand conditions in those major markets improve which does point to higher export volumes.”
On the domestic front, the situation was much brighter.
“Our domestic market last year performed very well.”
While consumer demand in overseas markets struggled, Australians continued to look for and purchase beef and “confidence was strong”.