Unprecedented global demand is expected to drive Australian beef and veal exports to a new record high by the end of 2015, AHDB, the organisation for the English beef and sheep industry says.

It says that shipments in the first half of 2015 have surged and are consequently well on track to be higher than last year’s record level.

With the momentum of the first half of the year only likely to slow a small amount, if at all, AHDB says that at 1.32m tonnes, it will be the fourth year in a row that export volumes have exceeded the previous year’s totals.

According to AHDB, a number of factors are driving this growth:

  • The Australian Dollar to US Dollar exchange rate.
  • Strong global beef prices.
  • High Australian beef production.
  • Relentless demand from Australia’s traditional three top export markets.

In terms of production levels, while slaughterings for this year have been revised down a fraction from earlier forecasts, AHDB says they will still be around 9m head, back just 2% on the record year of 2014.

Carcase weights are running slightly ahead of the year earlier it says which, despite the downwards revision in numbers, means production is actually revised up from earlier estimates.

AHDB says it is expected to reach 2.55m tonnes, just back 2% on the year, previous estimates had it coming back as much as 10%.

In line with slaughterings, the greatest decline in production is likely to be felt in the later stages of this year AHDB says and starting a period of lower year-on-year production levels, which is likely to last throughout 2016 and 2017.

In 2017 adult slaughter is forecast to be below 7m head for the first time in over 20 years with beef and veal production at a low point of 1.95m tonnes, back over 20% on this year’s level, AHDB says.

Outlook

AHDB says that looking ahead, considering the combined turn-off of live exports and cattle slaughter and that female slaughter has been higher year-on-year for over 30 months, the cattle herd is expected to fall to 26.1m head next year.

This is down 11% since the drought began in 2012 and while the herd will be at its smallest since 1995, only a slow rebuild is expected given that producers need to recover some cash after the drought years, it says.

It is inevitable, according to AHDB that there will be strong processor and live export demand from what will be a much smaller pool of cattle.

Under these circumstances, it says that the strong cattle prices observed during the first half of this year are expected to continue, potentially enticing a greater level of slaughter that otherwise would have been the case.

The consequence of the intense international trading environment, AHDB says is lower volumes available on the domestic market.

Domestic consumption is forecast to drop 15% this year resulting in per capita consumption falling over 4kg on the year earlier to 26kg, it says.

Against the backdrop of lower production this trend is likely to continue over the next few years however, AHDB says that despite this, the domestic trade will remain the most valuable market for Australian beef and the main market for more expensive loin cuts.

Underpinned by the unprecedented international demand, domestic retail prices are notably up on the year to be at their highest on record, it says.