Global markets are awash with cheap lamb and big volumes of supply from New Zealand are about to start flowing.
Little of the Kiwi product is forward sold, so analysts are warning of added downward pressure on prices.
Australia produced the most lamb on record in 2022. For the first six months of this year, it is tracking 7.7 per cent, or 20,000 tonnes, above year-on-year levels.
The latest Australian Bureau of Statistics figures show during the June quarter, 149,385t of lamb was produced in Australia, which is 4pc more than the previous record set in June 2018.
Much of this product has filled orders that NZ lamb might traditionally flow into; so there are big questions around where the Kiwi meat will go.
The big volumes of lamb on the market have coincided with dampened demand as cost of living pressures tighten belts, making business in the lamb export game very slow right now.
Global AgriTrends analyst Simon Quilty said in the United States, where lamb was a premium item alongside Wagyu, sales had struggled to gain traction in recent months.
"The good news is that the US lamb cut-out has stopped falling, which supports imported lamb prices. The bad news is that it has not started rising and may remain flat for many months," he said.
China was carrying extensive inventories of mutton and lamb, he said.
Mutton's situation was even worse due to a lack of diversity in markets, Mr Quilty said.
China takes close to half of Australian mutton available for export and is stocked up.
Demand from other mutton markets, such as Malaysia, North America and the Middle East is also subdued, for various reasons.
"The Middle East is due to the usually hot seasonal summer conditions, and buying interest should pick up in September and October when temperatures cool," Mr Quilty said.
"The heavy reliance on China for mutton exports is concerning, and there needs to be more diversification and less dependence on one market.
"Australia's lamb exports are much better diversified across Asia, North America, Europe, and the Middle East, with a good spread across 25 markets and another 70 markets taking smaller volumes.
"Yet even with this more extensive base, there have been challenges with pricing."
The New Zealand sheep and lamb season will kick off in October, with the kill-and-slaughter peak typically from February to April.
Mr Quilty said monthly shipments would likely more than double between now and March.
Traders were reporting buyers are very cautious, taking product in a hand-to-mouth fashion as a result. The expectation is NZ sales will make lamb even cheaper.
Shan Goodwin
Shan Goodwin steers ACM’s national coverage of the beef industry. Shan has worked as a journalist for 30 years, the majority of that with agricultural publications. She spent many years as The Land’s North Coast reporter and has visited beef properties and stations throughout the country and overseas. She treats all breeds equally. Contact 0427686187. E: s.goodwin@austcommunitymedia.com.au
Shan Goodwin steers ACM’s national coverage of the beef industry. Shan has worked as a journalist for 30 years, the majority of that with agricultural publications. She spent many years as The Land’s North Coast reporter and has visited beef properties and stations throughout the country and overseas. She treats all breeds equally. Contact 0427686187. E: s.goodwin@austcommunitymedia.com.au
