WEATHER conditions and last year’s temporary ban on live sheep exports to the Middle East produced a dramatic rise in overall mutton meat exports for 2018, while boxed and carcase lamb exports were moderately higher.

Department of Agriculture export data released recently shows Australia’s 2018 calendar year chilled and frozen lamb exports reached 267,253 tonnes, about 16,000t or seven percent higher than the previous year. The record annual figure is about 14pc higher than the five-year average.

Last year’s mutton exports reached 179,998t – 33,000t or 22pc higher than the 2017 year – as meat exports displaced the Middle Eastern live trade from July to October following the shipment ban. On the back of elevated slaughter, Australian mutton exports last year were 15pc above the five-year average.

Strong global demand for Australian sheepmeat, combined with the softer A$ and constrained supplies out of New Zealand, supported record export volumes and values in 2018. While seasonal conditions drove erratic lamb shipments and elevated mutton exports, receptive world markets have been willing buyers of both.

Over the July–October of live export market closure, chilled lamb and mutton carcase exports to the Middle East out of WA more than doubled on year-ago levels, to almost 5000t, or to an estimated 284,000 head on an assumed 17.5kg average carcase weight, while shipments out of the eastern states increased 17pc, to 16,100t (or an estimated 918,000 head).

Lamb shipments up 7pc

Last year’s lamb exports saw China continue to draw closer to the US as Australia’s largest lamb market, by volume.

The US last year took 56,830t of Australian lamb, about 3pc higher than the previous year. China, meanwhile, accounted for 52,929t of lamb last year, ten percent higher than the year before and a new country record. The China figures do not account for Australia’s export trade into Hong Kong – last year reduced to about 2100t, after a crack-down by Chinese authorities on the so-called ‘grey trade’ used by smugglers to avoid taxes and tariffs out of nearby Hong Kong and Vietnam.

Third largest lamb export market, the Middle East, accepted 74,736t of Australian lamb last year, a sharp 17pc rise on the previous year due in part to the mid-year live export cessation.

South Korea remained a steady market for Australian lamb, especially popular in Genghis Khan barbecue cuisine, taking 14,706t last year, 10pc higher year-on-year.  Papua New Guinea was next, accounting for 10,358t of mostly lower value frozen cuts, while Japan and the European Union dead-heated with total imports of 9988t. The EU intake was down 3pc on the previous year, while Japan’s intake was up 19pc, as the popularity of lamb in food service and retail segments in Japan grows.

Mutton exports explode

As highlighted in the intro to this report, dramatic growth in demand out of China and Middle Eastern sheep live export market closure in mid-year had a profound effect on mostly frozen global mutton exports last year.

China now dominates Australia’s mutton trade, accounting for 54,937 tonnes last year, or 31pc of the total. The tonnage was up almost 20,000t or 57pc on the previous year.

The ten countries making up Australia’s Middle East market took 45,845t last year, up 3pc in 2017 trade. The mostly ethnic market for Australian mutton in the US improved substantially last year, reaching 18,361t, 37pc or 5000t better than the year before.

Malaysia also showed solid growth in mutton trade last year, accounting for 17,109t, up 21pc year-on-year, while Taiwan also showed rapid growth, taking 6122t last year.

There was little change in mutton shipments into the EU market (mostly eastern European member states) taking 5288t of Australian mutton last year.

Looking ahead

The poor seasonal conditions that marred 2018 will likely have significant impact on sheepmeat supply in 2019, Meat & Livestock Australia suggests. Poor marking rates combined with a significant ewe cull have raised concerns throughout the industry regarding lamb supply for the coming season.

Many producers will be desperate for some more consistent rainfall this year, which would alleviate some of the cost pressures associated with high feed costs. Longer term, a return to better conditions would also allow for some rebuilding of heavily-depleted breeding flocks.

At the start of last year, many sheep producers were looking to expand their flocks to take advantage of strong meat and wool prices. However intentions soon went out the window as an extremely challenging year unfolded. Widespread rainfall deficiencies in south-east Australia, particularly drought-stricken NSW, led to elevated sheep slaughter, poor marking rates and volatile lamb supply.

Fortunately, robust international demand and a falling A$ supported Australian exports and, in turn, domestic saleyard prices. In fact, some indicators rose to record heights, with many destinations around the world continuing to seek out Australia’s high quality sheepmeat products.

Lamb slaughter in 2018 experienced both record highs and recent lows as the market had one of its most volatile years on record. After tracking near even with last year through the first quarter, lamb slaughter spiked in the second quarter of 2018 as dry conditions worsened and producers looked to destock. Numbers peaked in May with the highest month of lamb slaughter on record.

However, weekly slaughter began falling rapidly during July, as drought conditions led to a nation-wide delay in the supply of new season lambs. Later in the year there were some increases in the quantity of new season lambs offered at saleyards in Victoria, however those in NSW remained much more restricted.

While the spring influx of new-season lambs typically corresponds with a general decline in carcase weights, the fall last year was more pronounced than usual, with unusually high numbers of lighter-weight, unfinished lambs presenting for sale, MLA reported.

Sub-optimal pasture growth combined with the high cost of stock feeds were the driving factors behind this trend. For 2018, the national average lamb carcase weight was forecast to reach its lowest level since 2015.

Sheep market

From the start of the second quarter last year, weekly sheep slaughter tracked well above 2017 levels, as producers had few options but to reduce their breeding flocks due to conditions. Despite strong wool prices, the lack of pasture and high feed costs forced many producers to reduce stocking rates and undertake heavy culling programs. Mutton slaughter peaked in August/September, with some processors opting to maintain output by targeting sheep as opposed to competing for under-supplied finished lambs.

Adult sheep carcase weights also declined in-line with the poor season, running considerably lighter than the 2017 year and dipping below the five-year average. For 2018, the national average sheep carcase weight was forecast to reach its lowest level since 2014.