Possibilities Global wrap with MLA General Manager
The impact of drought conditions across many parts of Australia has forced many producers to turn-off stock, leading to year-on-year lifts in production in 2018, but not necessarily as elevated when compared to longer term averages. On a national level, year-to-July.
Adult cattle slaughter is up 10% year-on-year, but 6% below the five year average. Lamb slaughter is up 9% year-on-year and 8% above the five year average, but has contracted sharply in recent weeks with the delayed onset of new season lambs. Sheep slaughter is up 27% year-on-year and 2% above the five year average.
Last month MLA reported on the strong performance of the Korean market and looming likelihood of safeguard being triggered. Australia is now at over 95% utilization and safeguard will likely be triggered in the coming weeks. Imports of Australian beef incur a 26.6% within-safeguard tariff, which increases to 40% once triggered.
In comparison, imports from the US incur a 21.3% within-safeguard tariff – which means the tariff differential will expand from 5.3% to 18.7% for the rest of the year once Australia triggers safeguard - placing additional competitive pressure in the market.