EXCHANGE rate volatility is expected to play a big role in demand for beef from the world's largest exporter this year and analysts believe that might provide an opportunity for Australia to build on its reputation for consistent, stable supply.
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Meat & Livestock Australia's latest analysis says beef exports from Brazil have doubled over the past decade, making the Latin American powerhouse responsible for 20 per cent of international beef trade.
MLA business analyst Tim Jackson said having exchange rates driving volumes from the biggest exporter in the world was a new phenomena.
"It might mean things are more volatile in total global supply but it also gives us an opportunity. Because our export volumes are determined by production, we can be quite steady with our partners overseas," he said in a recent webinar hosted by the big red meat service provider.
"If we can provide our customers with good information about how the herd is going, we can arguably be a bit more reliable and stable."
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Brazil has cemented its role as the top beef supplier to China and that position is expected to be consolidated further in 2023 in light of less available supply from Uruguay and Argentina.
Global market intelligence outfit Steiner Consulting Group has forecast Chinese beef imports to continue to increase this year, albeit at a much slower pace of around 4 to 4.5 per cent. That will come on top of the 18pc increase realised in 2022.
The surge in shipments from Brazil to China hit 98,866 tonnes in December, compared to just 6745t for December the year before, Steiner's data shows.
Brazilian cattle slaughter in the last quarter of 2022 was estimated up 12.3pc from the previous year, so there is plenty of supply in the pipeline.
However, Mr Jackson said Brazil's domestic consumption had dropped.
"Economic growth in China has created a lot of consumers for imported beef but at the same time, the Brazilian currency has declined in value, severely cutting into the purchasing power of Brazil's consumers," he said.
"Clearly, it has made it more profitable for packers to export.
"The situation means the exchange rate has become an important determinant of the volume of beef that ends up on the global market."
With US beef exports widely forecast to contract, supply out of Brazil will become even more important to Australia's fortunes this year.
Steiner reports US cattle supplies on the ground at the start of the year were 3pc lower than the previous year.
The supply of cattle on feed is down 3.7pc, suggesting significant US slaughter declines as soon as quarter two, according to Steiner.