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Global markets held dear

International beef market experts say it’s unlikely any of Australia’s overseas markets will be completely lost as cattle supply dries up.BEEF exporters will look to retain a presence in all Australia’s international markets as the era of short cattle supply kicks in.

Given the next two years will herald the largest drop in Australian cattle turn-off in decades, that could well mean only a trickle of volume in some foreign markets but those at the forefront of developing our red meat trade overseas believe no markets will be completely lost.

Meat and Livestock Australia’s six international business managers based in key export destinations met in Sydney last week.

The message on how the cards will fall globally for beef as supply dries up was that advances made would be kept in mind by exporters looking to send product where the best returns are achieved.

Australia exports red meat and livestock to more than 100 countries, representing around 70 per cent of the industry’s production and a revenue of $9.4 billion.

MLA has estimated cattle numbers to fall by 16 per cent year-on-year to 26.2 million head by June, and then again to 25.9m next year.

The initial gap would be met by higher carcass weights and adjusting to where market demand for Australian product remains strongest, said MLA’s international business manager Southern Asia Andrew Simpson.

“Although sluggish at present, savvy Australian exporters have great knowledge of global prices, country requirements and are able to act nimbly,” he said.

“Knowledge is instant on markets but sometimes swinging production away can be delayed if processors are forward sold.

“Commercial sense means that the bulk of product always goes where the return is best – but prudent exporters continue to retain lines into multiple niche markets so they have alternatives to move supply during all seasons.”

MLA’s general manager of international markets Michael Finucan said global beef markets ebb and flow all the time.

“What we’ve seen in recent years is an extreme case and there will naturally have to be rebalancing,” he said.

“Long-term markets like Japan, the US and Korea will be more resilient to pricing pressure than the likes of South East Asia and some parts of the Middle East.

“Beef is a staple in those mature markets where it is a treat in the emerging markets.”

In recent years, MLA had been pulling resources from Japan and Korea and the domestic market in order to foster growth in those emerging markets, Mr Finucan said.

That will change now.

“We will seek to defend our presence in Japan and Korea, where consumers are more likely to pay the higher prices,” he said.

“Then as more beef comes online we’ll channel resources back the way of the developing markets.”

Mr Simpson said price points and volumes in emerging markets of South East Asia would be tested this year as strong competition from the larger markets kick in.

“Some of these niche markets may be retained by smaller volumes at times of price pressure, to continue a program or loyalty connection, rather than walking away completely,” he said.

“Other markets will remain fiercely competitive and pay premiums to retain brands and consistent supply.

“Consumers love their beef in these markets, but pork and chicken meats are currently trading at much lower prices and retaining the lion’s share of weekly meal purchase decisions.”

The fact Australia produced a variety of beef categories suited to the diversity of South East Asian demand would remain an advantage as tighter supply and price pressures became prominent, Mr Simpson said.

“One category under pressure will be cow supply as restocking will bind more product to farm,” he said.

“Emerging markets in Southern Asia with a higher reliance on cow cut portions will need to consider broader options or just pay more.”

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