Lack of heavy lambs constrains US exports

12 September 2018

Recent high prices for lambs reflect a constrained supply coming onto the market, in particular a lack of quality heavy lambs.  As reported in Prices & Markets, poor seasonal conditions have also delayed the influx of new season lambs out of NSW.

Lamb exports to the US ease 16%

International demand for sheepmeat, supported by a softer Australian dollar, has supported prices with China and the US leading the way as the largest recipients of Australian sheepmeat in 2018.

So far this year, sheepmeat exports to the US have continued to expand, up 8% year-on-year, with lamb and mutton exports climbing 5% and 19%, respectively. However, limited availability of heavy categories saw lamb exports to the US in August ease 16% year-on-year (but offset by increased mutton shipments).

Ever-increasing competition from China has also pressured shipments to the US; in the first seven months of 2018, the US ceased being Australia’s largest lamb export market on a volume basis (but it remains Australia’s most valuable).

Conditions in the US

US lamb and sheep slaughter was seasonally lower in late July and August. In the four weeks ending 25 August, US sheep and lamb slaughter averaged 37,600 head/week, 3.1% higher than the same period the year prior but 2.4% lower than the five-year average. The lift in domestic supply and the cheaper price of competing proteins (chicken and pork) resulted in a sizeable increase in sheepmeat cold store inventories in July (at 19,000 tonnes, up 55% year-on-year and 26.5% above the five-year average).

US farm gate lamb prices have declined in recent weeks; however, the price of imported product remains historically high, underpinned by the high cost of lambs in both Australia and New Zealand. US retail outlets will be seeking lower prices in order to move through surplus supplies, as pushing more lamb through retail channels at elevated prices remains a challenge. Loin chops featured heavily at retail in August, accounting for 44% of all lamb features, and prices averaged 8.4% above year-ago levels.

Read the latest monthly US Lamb Market Update prepared by Steiner Consulting

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