Lamb exports hit another high note

During May, 36,703 tonnes of lamb were exported, the highest lamb export on record for a single month.

According to Meat & Livestock Australia, the increase in total export volume has led to a diversification in markets, with exports to Iraq increasing fivefold to 1386 tonnes to become Australia's eighth largest lamb market in May.

Meanwhile mutton exports for May reached 21,664 tonnes, the largest single month figure since November 2019 and the second highest month on record, with most of the growth coming from Middle Eastern markets.

While record values have also been achieved this year, with Australian sheepmeat exports worth $462 million for the month of March according to Australian Bureau of Statistics figures, export prices for lamb are back from the heights seen in 2022.

Frozen cuts of lamb with the bone in for export reached an average price of $9.13 per kilogram in June 2022, compared to an average of $6.43/kg in April this year.

Fresh or chilled cuts of lamb with the bone in sold for an average of $17.79/kg in October 2022 but were back to an average of $14.55/kg in April.

Episode 3 market analyst Matt Dalgleish said the sheer volume being shipped this year would be playing a major role in the overall value.

"A big portion of that high value would be the volumes going out whereas if you go back to previous times that we've had peaks in the trade in terms of dollar amounts, it was probably more to do with the higher pricing we were getting," he said.

"The pricing is still not too bad though... the pricing is off by about 20 per cent from some of those peaks but the volumes are up by 56pc.

"We've got record overall value... it would be the volumes that are carrying the lion's share of that record export value."

Mr Dalgleish said as supply dwindles through winter, the export growth and demand could be expected to dip somewhat as prices go up.

"Then it won't be long before we hit the spring flush and we have another reduction in price again and we will probably have another solid end to the year as well," he said.

"Also for some of the countries that are experiencing good growth like America, the other part of the dynamic is the availability of red meat there including beef and where they are in the rebuild of their herd... it might be the case that demand would still be reasonably strong [even with higher winter prices] because even if our prices were higher they're probably not going to be as expensive as domestic beef in the US at the moment.

"There could be a bit of substitution effect going on there with people switching out and looking for cheaper red meats... lamb is still a niche product but through COVID-19 there were a lot more people who started to branch out.

"Because they were stuck at home there was a bit of an explosion of home cooking with people looking at different recipes because they had plenty of time in lockdown, trying to cook things they were less familiar with such as lamb.

"It only takes a little shift for fairly big volumes to start to flow through."

Meanwhile the latest ANZ Agri InFocus report predicts that it is unlikely that slaughter rates can stay so high for much longer, with stronger prices anticipated as winter causes fewer lamb and ewes to be put on the market.

The report also highlights that exports remain the key driver of growth in demand but the recent reduction in retail lamb prices and its growing retail discount compared with beef along with the slowly increasing pork price could underpin a growth in the domestic market.

"However continuing concerns of the cost of living crisis may either help or hinder - as people move to lamb in preference to beef, or conversely away from red meat altogether due to its perception of being more expensive," the report reads.