Lamb exports slide with supply

Already tight lamb supplies were exacerbated by a run of short trading weeks in April. Across the eastern states, the average weekly kill in April was 17% lower than last year, at 310,579 head. Despite a reasonably strong first quarter, it was therefore not surprising that the Australian lamb exports during April were down 19% year-on-year, to 17,053 tonnes swt (DAWR). Volumes shipped in the preceding three months of the year tracked well above their five-year averages, while April slipped 3% below.

This brought lamb exports for the year-to-date to 80,742 tonnes swt, down 3% from year-ago levels – largely the result of reduced availability. The eastern states lamb kill for the first four months of 2017 averaged 341,378 head per week – 8% lower than last year. It should be noted that these volumes are off the back of very high levels in 2016. To put this in perspective, year-to-date lamb shipments remain 14% higher than the five-year average for the period.

There has also been a shift in the proportion of chilled and frozen lamb that has left Australian shores so far this year. For the January to April period, the share of higher value chilled lamb dropped to 40% of the total – the lowest level for this period since 2012. This was predominantly underpinned by a reduction in chilled volumes to the US and the Middle East, and increased volumes of frozen product to Asia.

Despite overall export volumes declining so far in 2017, some markets have maintained a positive position. China and Korea have been the major growth markets for Australian lamb exports for the first four months of the year. Shipments to China were up 29% year-on-year, to 16,666 tonnes swt, driven by increased volumes of breast and flap (up 32%, to 11,004 tonnes swt), manufacturing (up 54%, to 3,705 tonnes swt) and neck (up 24%, to 1,686 tonnes swt). Lamb to Korea has surged 81% to 4,294 tonnes swt, with shoulder and breast and lamb consignments more than doubling year-ago levels.

Lamb exports to the EU recorded an 8% lift for the year-to-April, reaching 3,719 tonnes swt. The growth was mainly driven by increases in leg, shank and boneless loin.

After five years of steady growth, shipments to the US for the January to April period have dropped back to 17,817 tonnes swt – down 11% year-on-year. This is largely due to the reduced pool of Australian lamb in 2017 compared to last year. Year-to-date shipments to the US remain 17% above the five-year average and in line with the long term anticipated growth trend for the market. Volumes of assorted cuts, leg, shank and shortloin were all lower, while, encouragingly, rack and shoulder exports to the US were higher than the same time last year.

Australian lamb destined for the Middle East in 2017 has declined 12% from last year, at 19,162 tonnes swt for four months to April – mostly the result of lower volumes to Jordan, Qatar and Saudi Arabia. All of the major cuts (carcase, leg, shoulder) to the region were down year-on-year, although rack exports did record a 12% lift year-on-year.

Visit MLA’s Market data and insights webpage to access more detailed April trade statistics, or read the 2017 Sheep Industry Projections April Update for further market analysis and forecasts.