TL;DR:
- January saw a record surge in Australian cattle exports to China, but underlying economic conditions suggest a tougher market than numbers reveal.
- The economic downturn and reduced consumer demand in China are impacting the value and demand for imported cattle, particularly dairy heifers.
- The New Zealand ban on dairy and breeding cattle exports has not led to increased demand from China for Australian cattle, reflecting the broader market challenges.
In January, Australian cattle exports to China experienced a significant increase, reaching a record 28,806 head, the highest monthly volume since records began in 2016. This surge included two large shipments from Australian exporters, primarily of dairy heifers and Angus and Hereford breeding cattle. Despite this uptick, the market conditions in China presented a challenging environment, with an economic slowdown and reduced consumer demand impacting the livestock trade.
Andy Ingle, managing director of Southern Australian International Livestock Services (SAILS), highlighted the current market difficulties, noting that economic conditions and the aftermath of COVID-related lockdowns have weakened demand for dairy products, affecting cattle sales to China.
Prices for dairy cattle have significantly dropped, with dairy cattle for export now valued at around $1000 per head, down from approximately $2600 before March last year.
The New Zealand ban on dairy and breeding cattle exports, which came into effect at the end of April last year, removed a major source of supply for China but did not result in increased demand for Australian cattle. This situation underscores the broader economic challenges facing the market, with government subsidies for cattle purchases becoming harder to access and a general cooling of the economy affecting livestock consumption.
Despite the January surge, SAILS had not shipped cattle to China for three months prior, reflecting the tough trading conditions. Ingle does not foresee a short-term improvement, attributing the current market downturn to a real economic hit rather than an oversupply of cattle in China.
The broader implications of these market conditions extend beyond China, with only 600 cattle exported from Australia to Indonesia in January due to delayed issuance of feeder cattle import permits. Other export destinations included Vietnam, Israel, the Philippines, Pakistan, and Malaysia, highlighting the diverse nature of Australia’s cattle export markets but also underscoring the challenges within key trading relationships.
