Cheap prices drive overseas demand for Aussie lamb and mutton

Data shows that Australia exported 31,779 tonnes of lamb in August, up by 14 per cent from July and 51pc above the five year average.

The result is the highest monthly volume on record

Mutton exports reached 15,856t, up 23pc from July and 34pc above the five year average.

It comes on the back of ANZ's latest Agri Commodity Report, which highlighted structural change in the export markets for sheepmeat, which correlates with the drop in lamb prices experienced since November.

ANZ associate director of agribusiness Alanna Barrett said in the year to July 2023, Australia recorded the highest volume of exports of lamb and mutton on record.

"In particular, exports to China are up 36 per cent year-on-year, while exports to South Korea are up an impressive 19 per cent, offsetting the 19 per cent decline in year-on-year experts to the US," she said.

"Notably, we have seen significant growth in exports to countries that sit outside our top 10 lamb trading partners this year, with exports to all 'other' nations tracking almost 20 per cent higher year-on-year."

"In fact, as a collective, markets behind the top 10 have been Australia's largest lamb export partner by volume every month since October 2022."

"While the trend initially emerged due to a sharp decline in demand from the US market, we're seeing significant positive outcomes for the industry as a whole."

Ms Barrett said building the number of export partners buying Australian lamb would build resilience into pricing for producers.

"Having lamb available at a price that encourages market breadth may generate some short-term pain for producers, but in the longer term, it may help to broaden global demand for the product," she said.

Episode 3 market analyst Matt Dalgleish said Australian lamb was currently much cheaper than lamb from other countries at present, allowing the capture of additional market share.

"US has regained volumes, China has gone really strong with a big uplift through July to August and then you've had trade to all other export destinations lift by 12pc, it's been across the board," he said.

"Mr Dalgleish said the big question was why the increase in exports were not translating to higher saleyards prices but said the answer was not entirely clear.

"I've heard a few other analyst talking around 'the freezers are full in Asia for sheepmeat' but we've just had a massive month," he said.

"If their freezers are full, why are they still taking these volumes... something doesn't stack up."

Mr Dalgleish said across the developing space there was a lot of growth potential for sheepmeat in the Middle East and Asia.

"If you look at broader meat consumption levels per capita, sheepmeat is the meat that is not eaten at a high per capita level in many countries," he said.

"It tends to be pork or chicken or beef that are the higher consumption items, so sheepmeat is a bit of a global niche.

"If you can get the pricing right it could be a market that has significant global growth potential as well.

"It's a bit of a two edge sword that people are unfamiliar with it in some cultures... like Japan is a high value market but they don't really know much about lamb or how to cook it.

"There's so much opportunity over so many different segments and that's only just starting to come to the fore."