OVERSEAS lamb markets have reacted to higher farmgate prices with a shift in the proportion of chilled and frozen shipments this year.
Meat & Livestock Australia market information manager Ben Thomas said for the January to April period, the share of higher value chilled lamb dropped to 40 percent 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.
“For the last couple of years, anywhere from 42-44pc (of shipments were of chilled product).”
Mr Thomas said in 2011 when the Australian dollar was stronger against the US dollar, chilled lamb made up about 35pc of total shipments.
“But when you look at it in absolute terms, the 32,000 tonnes (of chilled shipments this year) is still a very, very strong year – it’s the third highest on record for the year-to-date.”
Mr Thomas said some resistance to the higher farmgate price levels is potentially part of the reason for the slight lift in frozen shipments. He said there also only two major markets for chilled product – with just under half going to the Middle East, about 10,000 tonnes to the United States and the remainder spread around the world.
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Asian markets maintaining positive positions
Mr Thomas said despite overall export volumes declining so far in 2017, some markets have maintained a positive position. He said Korea has been one of the main drivers of the increased frozen volumes into Asia. Lamb to Korea has surged 81pc to 4294 tonnes, with shoulder and breast and lamb consignments more than doubling year-ago levels.
“Yes, it does start from a very low base, but there has been some considerable growth to that market this year.”
Korea and China have been the major growth markets for Australian lamb exports for the first four months of the year. Shipments to China were up 29pc year-on-year, to 16,666 tonnes, driven by increased volumes of breast and flap, up 32 to 11,004 tonnes; manufacturing or trimmings, up 54pc to 3705 tonnes, and; neck, up 24pc to 1686 tonnes.
Lamb exports to the EU recorded an 8pc lift for the year-to-April, reaching 3719 tonnes. The growth was mainly driven by increases in leg, shank and boneless loin.
US shipments fall 11pc
After five years of steady growth, shipments to the US for the January to April period have dropped back to 17,817 tonnes – down 11pc year-on-year. Mr Thomas said this is largely due to the reduced pool of Australian lamb in 2017 compared to last year. However, year-to-date shipments to the US remain 17pc 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 shipments destined for the Middle East in 2017 have declined 12pc from last year, to 19,162 tonnes for the four months to April – mostly due to 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 12pc lift year-on-year.
Mr Thomas said MLA had insufficient information to determine how farmgate price increases had affected exporter margins and wholesale prices for Australian lamb, or if any price changes had led to differing demand for specific cuts in overseas markets.
Lamb exports slide with supply
Mr Thomas said already tight lamb supplies have been exacerbated by a run of short trading weeks in April.
“Across the eastern states, the average weekly kill in April was 17pc 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 19pc year-on-year, to 17,053 tonnes (DAWR figures).”
But volumes shipped in the preceding three months of the year tracked well above their five-year averages, while April slipped 3pc below.
Lamb exports for the year-to-date total 80,742 tonnes, down 3pc from year-ago levels – largely the result of reduced availability, he said.
The eastern states lamb kill for the first four months of 2017 averaged 341,378 head per week – 8pc lower than last year. Mr Thomas said 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 14pc higher than the five-year average for the period.”
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.