The world wants Australia’s mutton.

THE closure of 11 JBS beef plants in Brazil this week is expected to further underpin the strong global demand for Australian sheep meat, especially mutton, according to Global AgriTrends analyst and trader Simon Quilty.

Mr Quilty said the decision was prompted by a 52 percent rise in beef prices.

The company had reportedly been looking at putting employees on leave at up to 11 plants in December or January, cattle prices hit record levels and drought conditions impacted supplies of suitable slaughter stock.

Although there is also a seasonal aspect to the move, Mr Quilty said the development will tighten up animal protein supplies into the Middle East and China.

“And it is very price-supportive for the commodity end, including mutton.”

He said this development and tightening supplies of buffalo meat will underpin global mutton prices.

Although the JBS plants have processed beef, they would tighten up global animal protein supplies, meaning better prices at the commodity end of the market “of which mutton is a part of that and to a lesser extent so is lamb.”

Record mutton kill in November

Australian processors slaughtered more sheep for export in a November than ever before last month and the high mutton kills are predicted to continue until supply and markets dictate otherwise.

According to Episode 3 analyst Matt Dalgleish, there was 28,249 tonnes of mutton exported in November, a 4 percent increase on the October volume of 27,200 tonnes.

Compared to the November five-year average volumes the current season’s mutton export level is running 62pc above the seasonal average level, Mr Dalgleish said.

The increase in mutton exports has been led by growth to China, underpinned by Malaysia. Mr Dalgleish said mutton exports in November 2024 reached a new record for monthly mutton export volumes of 15,526 tonnes shipped. The last quarter of the year often posts the highest seasonal flows of mutton to China, so it is not unsurprising to see a record broken at this time in the year, he said.

“However, the current export levels are exceptionally robust sitting 50pc higher than the mutton export flows seen during November 2023 and 75pc above the November average volumes, as per the last five years of the trade.”

And why?

The Rural Bank’s November Insights update said mutton markets have found support as processors have shifted their focus to sheep due to the reduced supply of finished lambs, especially heavy export lamb. Mutton prices will be supported by the tightening supply picture for sheep, but will face pressure as increased supply of new season lambs will see processors shift focus away from mutton, the bank said.

However, this has not been as marked as in other years, compounded by a later seasonally-driven new season lamb flush. Mr Dalgleish said mutton slaughter has not backed off substantially as new season lambs came onto the market, but big lamb yardings are still to come into early 2025.

“Usually they make space for the spring lambs coming through.”

Mr Quilty said the turn-off of mutton has been driven by quality lamb supply problems here and impacted by the demand for protein in countries affected by retention of buffaloes in a post-Lumpy Skin Disease herd rebuild in countries like India. China imports most of its buffalo meat from India, Vietnam, and Pakistan, which have all had recent LSD outbreaks. Mr Quilty estimates the herd rebuild will last at two years and he has been unable to get prices for buffalo meat out of India for six months forward.

“The prices are higher and they are only willing to offer three months out.”

Mr Dalgleish said another factor is that China is in an economic “down patch” and consumer confidence is down.

“So if they are looking to purchase meat and be a bit thrifty then mutton is a very good option.”

The mutton sell-off usually wanes after producers have sold off cast-for-age or surplus ewes before joinings the next year. But Mr Dalgleish doubts that mutton demand and price will drop “in the near term” when the buffalo rebuild is over or if the margin on mutton drops in a more competitive protein market.

“No, it’s shaping up again for a pretty strong demand season next year for mutton as well.”

He believes there might be a shift in some kills from mutton to lamb when sufficient heavy lambs came onto the market into 2025.

“But we’ve got to see the prices adjust downwards for the lamb in response to higher supplies.

“If that doesn’t occur then they will continue to favour mutton.”

He said heavy, trade and light slaughter lambs prices are all 250c/kg higher than last year, whereas the mutton indicator is 180c/kg higher than in 2023.

“Even though they are all up, and uncharacteristically above levels they should be at, mutton is still the desirable one at the price points.”

What do the agents say?

RMA Network chief executive officer Chris Howie said there are currently a lot of sheep being slaughtered to fill processing gaps unable to be filled with lamb.

“And if they can’t get the mutton, the mutton price is either going to have to go up or that lamb price will have to go up to secure more numbers.”

The next mutton turnoff will come after shearing in January, with a pastoral turnoff in February-March and then after the agricultural area shearing from July onwards, he said.

Mr Howie said in October, especially South Australia and Victoria, the mutton kill was driven by the poor seasonal conditions, with many producers selling down into younger ewe age groups.

Nutrien national livestock director Mark Barton some of his some of his clients in the south-west slopes and tablelands of New South Wales with enough carryover feed have sat on sheep waiting for prices to rise.

But he believed sheep numbers from the west of NSW have been diminished “and as a general rule I would have thought there were not massive number of grown sheep out there (in NSW).”

Click here for Episode 3’s more detailed look at Australia’s mutton markets.

Click here for the full Rural Bank November Insights.