TOKYO: Australian beef is winning an increasing share of the Japanese market, thanks to a trade agreement implemented this year, but the success will be short lived, as the US begins to reclaim its lost market share next year, the US government says.
Australian imports will be hit by a fall in the country’s cattle inventories, after several years of drought-enforced herd reduction boosted slaughter rates, while rising Japanese beef prices will open up opportunities for US exporters.
Japan will import 727,000 tonnes of beef next year, the Tokyo bureau of the US Department of Agriculture forecasts.
This is above the USDA’s official 2015 forecast of 720,000 tonnes, but behind the Tokyo bureau’s revised forecast of 740,000 tonnes. And after a year when Australian beef dominated the Japanese market, US exports will start to win back the lost ground.
The Tokyo bureau predicted that Japanese beef imports would “shift from Australian beef to US beef as Australian cattle slaughter eventually tapers on reduced cattle inventory and US beef output is forecast to begin a moderate expansion”.
Australian beef imports to Japan have been boosted by the implementation of the Japan-Australia Economic Partnership Agreement, which included an agreement to cut the Japanese tariff on Australian beef imports.
“Conditions in the Japanese beef market in 2015 have increasingly favoured Australian beef, as imports from Australia have benefited from continued high exportable supplies, geographic proximity, a more favourable exchange rate and preferential duties under the JAEPA deal,” the bureau noted.
Japanese imports of Australian beef accelerated after April of this year, following a further cut to import duties. Australian beef production has soared as dry weather forced farmers to slaughter cattle, suppressing prices. However, as this herd liquidation carries through, it will shrink cattle supplies in the longer term.
Meanwhile the high price of US beef, combined with the strength of the dollar, has left US beef less price competitive. Imports of chilled beef from the US were also hit by port labour dispute on the US west coast, which was resolved in late February 2015.
The Tokyo bureau that this pattern will continued for the rest of the year, “further expanding Australian market share at the expense of imports from the United States,” before the situation is reversed next year.
Imports from Australia 12% to 202, 835 tonnes in the first six months of 2015, while imports from the US were down 12 % to 105,630 tonnes. Lower imports and domestic production, combined with rising demand, will squeeze supplies, and push Japanese beef prices higher in 2016.
“For four successive years, total domestic cattle slaughter in 2016 is forecast to fall, projected down by 2% to 1.105 million head (or total beef production of 480,000 tonnes),” the bureau said. The fall in production is the result of calf production shortfalls in 2013-14.
Meanwhile beef imports are projected to fall 2% in 2016, to 727,000 tonnes. The bureau projected that that “the moderation of US beef price offers and the unwinding of significant 2016 year-beginning stocks should result in marginal beef consumption growth in 2016 to 1.215 million tonnes”.
