AUSTRALIAN beef and veal exports are forecast to reach one million tonnes in 2013 and break the previous record set last year by 4 per cent.
In its mid-year review of cattle industry projections released this week, Meat and Livestock Australia (MLA) found some good news for the many beef producers who have been forced to offload large numbers of cattle
into markets hit by drought and ongoing uncertainty over the future of live exports to Indonesia.
As a result Australia is expected to produce almost 2.2 million tonnes of beef this year of which about 710,000 tonnes will be consumed locally, a drop of 1.4pc year-on-year.
MLA's chief economist, Tim McRae, said the export outlook had been boosted by the recent depreciation of the Aussie dollar along with brighter economic conditions in several key markets.
Most Australian banks were forecasting the Aussie would be well below parity with the US greenback for the remainder of the year, which Mr McRae said would help lift the competitiveness of our beef but warned the strength of our dollar against other major beef trading currencies such as the Japenese yen and Brazilian real would play a key role in determining the final destination of export beef.
Hefty rises in demand from China and the Middle East was helping offset a slide in sales to our big three traditional overseas markets - the United States, Japan and South Korea.
The combined export share of these three countries has declined from 91pc of total shipments in 2005 to 68pc in 2012 and has dropped to 61pc in the first six months of 2013.
The slack was being taken up by other markets, notably China and the Middle East, Mr McRae said.
After a sudden surge in demand at the end of 2012, China has continued as a promising market for Australian beef this year.
Our reputation as a "clean and safe" supplier had placed Australia in an good position to capitalise on tightening food safety regulations in China along with the emerging economic powerhouse's growing middle class.
Further boosting China's appetite for Australian beef was its reportedly low national cattle herd which had caused a shortage of local beef.
MLA said Australian beef and veal exports to China during the first half of 2013 reached 62,421 tonnes, up significantly from the 3048 tonnes in the same period in 2012.
With such a strong start to the year, total shipments have already smashed the January forecast (35,000 tonnes), making China the third largest destination for Australian beef during the first six months of 2013. Exports to China were now forecast to reach 115,000 tonnes in calendar 2013.
While most of the Australian product shipped to China during the first half of 2013 was frozen beef, at 53,531 tonnes, high-value chilled beef exports have also been steadily increasing.
China was also importing a more diversified range of frozen cuts including brisket, shin/shank and silverside, placing more pressure on Japan and Taiwan which traditionally had bought these products against minimal competition.
Australia now has an almost 50pc share of China's beef import market, followed by Uruguay (25pc), NZ (16pc) and Canada (8pc).
Australian beef exports to the Middle East have been growing for a number of years, with consistent year-on-year increases since 2005.
Shipments to the region have accelerated again in 2013, with volumes up 118pc year-on-year and almost equal to the total volume exported in 2012, at 30,577 tonnes.
Underpinning the rise in exports has been Saudi Arabia's ban on Brazilian beef after an atypical case of BSE was reported in late 2012.
MLA said since the decision Australian beef sales to Saudi have reached 16,168 tonnes, up 556pc year-on-year.
Exports to Iran (2422 tonnes) and Kuwait (2540 tonnes) for the first six months of 2013 had also been encouraging with volumes up 1168pc and 134pc year-on-year, respectively.
Demand from Japan had been sluggish this year and was expected to remain so for the rest of 2013, underpinned by improved market access for the US and ongoing domestic economic gloom.
Exports to Japan in 2013 were now forecast by MLA at 290,000 tonnes, the lowest level since 2003.
Shipments to Korea have been strong for the first six months of 2013, despite an increasing price advantage for US beef through the Korea-US Free Trade Agreement.
But MLA said shipments were likely to ease as the year progressed because of the availability of large supplies of local beef and pork.
Exports to the US have had a slow start to the year due to increased competition from NZ and higher than expected US cow slaughter.
Exports to the US were predicted to pick up in the remaining months of 2013 due to tighter NZ supplies, lower US beef production and more attractive prices from Australian exporters on the back on the lower
Aussie dollar and reach 225,000 tonnes – one of the lowest annual totals during the past 15 years.
Live cattle exports were forecast at 575,000 head in 2013 with further growth resting on the outcome of talks for higher quotas to Indonesia.