The Monbeef slaughterhouse, part of the Bindaree Food Group and situated about 100 kilometers south of Canberra, processes around 200 cattle daily, a significant increase from the 30-40 processed two years ago, with potential to rise to 220 in the near future.
"It's a prime opportunity," stated Ryan McDonald, the livestock manager at the plant. "The demand from the U.S. export market is pushing abattoir prices higher, which in turn elevates the market for cattle."
A decline in U.S. beef production has created an opportunity for Australia to export unprecedented quantities of meat, enhancing its market presence in North America and Asia, and generating billions of dollars for cattle processors and farmers.
Australia and the United States rank among the largest beef exporters globally, each contributing just over 10% to the international beef trade, exporting approximately one million metric tons valued at around $8 billion annually, according to trade statistics.
Drought conditions have reduced U.S. cattle populations to their lowest levels since the 1950s, leading to increased beef imports and decreased exports.
Analysts predict a further decline in U.S. beef exports as farmers retain cattle for breeding and herd rebuilding, presenting a growing market opportunity for competitors.
Most major beef exporters, including Brazil, face challenges in capitalizing on this opportunity due to production declines or restricted market access.
South American producers encounter tariffs in the United States and are largely prohibited from exporting to Japan and South Korea, the primary destinations for U.S. beef, due to regulations concerning foot and mouth disease.
Australia currently enjoys a surplus of cattle following four predominantly wet years and benefits from seamless trade access to the United States, Japan, and South Korea.
However, this advantageous situation is not expected to last indefinitely. Cattle markets are cyclical, characterized by phases of de-stocking and rebuilding. By the late 2020s, it is anticipated that Australia's cattle herd will be diminished, while U.S. cattle populations are expected to have rebounded.
For the time being, there are significant profits to be made in Australia, according to Ben Theurer, a Barclays analyst based in Mexico City.
"Australia is poised for a prosperous few years ahead. It will be extremely lucrative," he remarked.
At JBS, the Australian division of the Brazilian multinational, EBITDA surged by 57% year-on-year, reaching $226 million in the second quarter, as indicated by financial reports.
Farmers are also reaping the benefits. Although cattle prices generally decline when supply is abundant, heavy steers are currently valued at approximately A$3.50 ($2.35) per kilo, according to data from Meat & Livestock Australia. This price, while lower than recent highs, is still above last year's low of A$2, which left many farmers struggling to remain profitable.
"We're seeing the advantages," stated George King, a farmer located near Carcoar in southeastern Australia. "Without that international demand, we would be in a dire situation."
MARKET SHARE
Australia's exports to the United States have surged from an average of 11,000 tons valued at $100 million per month in 2022 to nearly 40,000 tons worth $290 million in August, marking the highest monthly total since 2015, according to customs data accessed via Trade Data Monitor.
Australia's share of U.S. beef imports has increased from 12% in 2022 to 22% in the first eight months of this year.
Exports to major Asian importers, including Japan, China, and South Korea, have also risen as U.S. shipments have declined.
In Japan, Australia's market share has grown from 38% in 2022 to 47% this year, while in South Korea, it has increased from 35% to 45% during the same period. Conversely, the U.S. share has decreased from 40% to 34% in Japan and from 55% to 48% in South Korea.
In China, where Brazil and Argentina dominate as the largest suppliers, Australia's market share has increased from 7% to 8%, while the United States has seen a decline from 7% to 5%.
Meat & Livestock Australia forecasts that Australia's exports, based on shipped weight, will grow from 1.08 million metric tons in 2023 to a record 1.36 million tons this year, followed by 1.37 million tons in 2025, before experiencing a decrease in 2026.
Nonetheless, Angus Gidley-Baird, an analyst at Rabobank in Sydney, believes that the United States will eventually boost production and regain its market share.
"This isn't a permanent shift," he stated. "However, it presents a valuable opportunity."