Recent appreciations in the price of Australian cattle, both at saleyards and direct to works, have reduced the price spread between livestock prices and export beef prices, on a per kg basis.
Australian beef exports during the first four months of 2016 were valued at A$2.31 billion (FOB), back 17% year-on-year.
The decline was purely driven by tonnage, with export unit values largely steady year-on-year over the same period.
The export value decline was led by the US (back 35%, to A$642 million), Japan (back 16%, to A$496 million) and China (back 23%, to A$198 million) – however exports to each market declined from a historically high point.
However, some markets have shown value growth in 2016, notably South Korea (up 22%, to $397 million), Indonesia (up 21%, to A$89 million) and Taiwan (up 10%, to A$59 million).
Unit export values have tracked mostly steady year-on-year, however at the same time Australian cattle prices have appreciated significantly over the past eighteen months.
This means the premium of the average unit export price over the national heavy steer indicator has halved from an average 64% during the first four months of 2015 to 32% so far this year. In fact, the last time the premium was so low was during the wet years of 2011 and 2012.
http://www.mla.com.au/Prices-markets/Market-news/Cattle-prices-narrowing-gap-on-export-unit-values