Australia's 2027 in-quota beef talks resume as Chinese buyers return

Chinese beef importers have started returning to the Australian market to enquire about 2027 in-quota shipments, with discussions focused on prices, meat availability and processors' production plans for 2027, according to market participants in Australia and China.

Australia exhausted its 2026 quota on June 18, exposing additional import volumes to a 55% tariff, according to China's Ministry of Commerce. Since then, most Chinese importers have been largely absent from negotiations, although some importers of chilled, premium cuts have continued to bring in Australian beef via air freight to maintain trading relationships with Australian packers, according to a China-based importer.

China's MOFCOM announced the 2027 quota volume for Australian beef at 209,000 mt, following the conclusion of a safeguard investigation.

"Apparently, Chinese buyers have started to look at November shipments," an Australia-based trader said.

Echoing this, an Australia-based exporter said China importers had definitely returned to the market. The exporter added that strong demand for feeder cattle destined for feedlots had kept grain-fed supply costs supported.

Grass-fed beef prices have shown a slight decline, but grain-fed has not followed the same trend, the exporter said.

Some processing plants are already preparing for October production, as China and South Korea are expected to return to the market for shipments eligible for 2027 quotas, according to the exporter.

Wagyu packers move first

The early activity appears to be led by Australian Wagyu packers rather than commodity beef suppliers, a second Australia-based trader said.

According to that trader, several Wagyu packers are already packing for China. The products will either be stored before shipment or shipped on long transit vessels, the trader said, adding that some importers may opt for prompt shipments while others could hold the products in bonded warehouses before customs clearance. One of the shipment options will be scheduled for October, the trader added.

"Some grass-fed packers will start to consider packing for China very soon also I believe," the same trader added.

A second China-based importer also said some domestic traders were considering this type of procurement structure.

Buyers wary of booking too early

Despite the return of inquiries, most buyers remain hesitant to commit too early because the shipment window is still far away, a third China-based importer said.

According to the importer, Australian beef shipments to China normally take around one month.

Current forward bookings carry high risk due to uncertainties over Australian live cattle prices during the next three months, while buyers would typically need to pay a 30% deposit and bear interest costs over the extended period, the importer added.

The importer expected most Chinese buyers to begin booking 2027 in-quota Australian beef in October or November.

The second Australian trader also described the strategy as a dangerous game, particularly if any Australian plant were to face a China suspension before the cargo arrives or clears customs.

Full cold stocks weigh on Chinese sentiment

While most Australian processors are expected to rush to secure market share under the 2027 quota, Chinese demand remains uncertain because domestic cold storage facilities are heavily stocked, a second Australia-based exporter said.

Several Chinese importers have said in recent months that China's cold storage is are full of beef inventory.

Although China's overall demand outlook remains clouded by high inventories, market participants said demand for Australian grain-fed beef remains relatively strong.

Echoing the strong demand for Australian grain-fed beef, the second China-based importer added that South American beef cannot fully replace it.

However, the arrival of new 2027 cargoes in January would likely pressure China's domestic spot market lower, the importer said, adding that domestically produced beef prices were also expected to fall.

Pressure expected on prices in other Asian markets

A Philippines-based Brazilian beef exporter said the return of Chinese demand for 2027 quota shipments would add pressure to supply and price for buyers in Southeast Asia. Importers in the Philippines and Japan also expected beef prices to trend higher.

Australia-based exporters remain cautious about relying heavily on China during the first four to five months of the year, according to the second Australia-based exporter.

Platts assessed weekly prices for front forequarter 8 beef CFR China at $5,700/mt on Aug. 14, up 2.7% week over week. Platts assessed FCA Australia 90CL beef at $6,794/metric ton Aug. 20, down 3.6% month over month, up 5% year over year.