Australia targets US beef export markets
The evolution of the cattle herd halfway around the world could have a big impact on the outlook for the US cattle sector in 2022 and beyond, as Australia increases production.
American beef exports have made significant gains in value and volume so far in 2021. For the first eight months of the year, 63% of these shipments have gone to the markets of Japan, Korea. South and Mainland China.
Australia has long been a major competitor in these markets. While 41% of Japan’s beef imports for 2019 and 2020 came from the United States, Australia held a share of 46%. In South Korea’s beef import market, the United States supplied 54% of 2019-2020 shipments, with Australia accounting for 39%.
Chinese beef imports tend to include a large portion of South American beef, although the higher-value beef targeting the food service industry and some retail outlets is made up of products from the United States, from Australia and New Zealand.
Change is coming
Developments in the Australian beef sector since 2020 have strengthened the competitive position of American beef in these vital markets, but that dynamic appears to be about to change again.
The quarterly outlook recently released by the Australian Bureau of Agricultural and Resource Economics and Sciences projects a 7.2% annual increase in Australian beef production from July 2021 to June 2022. This follows a 12.7% drop. for the calendar year 2020 and an additional 7%. decrease this year.
The main component of the sharp declines in production followed by strong growth has been a multi-year drought suffered by cattle producers in Australia. The drought ended in early 2020. Beef production and exports in 2019 were near record levels in Australia as poor pasture conditions forced many animals to be slaughtered. As pasture conditions improved and producers rebuilt the cattle herd, the supply of beef for export became scarce and livestock prices rose sharply.
ABARES predicts that prices will decline in the first half of 2022, as the herd rebuilding rate slows and herd additions that began in 2020 will result in an increase in market-ready livestock in 2022. A recent report from the Foreign Agricultural Service of USDA provides similar expectations for 2022, Australian beef exports are expected to increase by 11.1%.
Not ready for rehearsal
Global demand for beef appears to remain strong, and the US beef industry is well positioned to take advantage of it in the years to come. But it will be difficult to replicate the growth that has been seen so far in 2021, as supplies of American beef contract and those in Australia begin to increase.
Japan and South Korea, the two largest beef markets in the United States, are unlikely to see large increases in beef imports in the future, so direct competition with Australia will be the most important factor. key to US shipping levels. China remains more of a wild card with upside potential for larger amounts of imports from the United States and Australia.
While there is still optimism about high levels of US beef exports, increased competition will make it difficult to repeat this year’s gains.
Brown is a livestock economist at the University of Missouri. He grew up on a diverse farm in northwestern Missouri.