February 25, 2014

 

Australia's lamb exports expected to soar in 2014

 

 

Driven by greater prosperity across countries such as China and others in the Middle East, and a steady recovery of the US economy, Australia's lamb exports to their top three markets are expected to soar higher in 2014.

 

China appears to be the big mover for forecast demand according to Meat and Livestock Australia (MLA) market information and analysis manager Tim McRae, who this month released the group's annual sheep industry projections.

 

On the back of record shipments last year, McRae was tipping China to take 10% more of the lamb this year, which meant shipments to China would rise to 43,400 tonnes (shipped weight).

 

Despite food safety issue for Chinese consumers, Australia's strong food safety regulations and the "clean and green" image have helped boost exports in recent years.

 

The popularity of hot pots in China has driven the demand for breast and flat cuts and in 2013 this accounted for just over 50% (or 20,331 tonnes) of the cuts exported to the market.

 

The Chinese market in 2013 accounted for about 18% of the Australian lamb exports, but the main competitor to this destination has been New Zealand with a market share of about 54%.

 

"Although the existing NZ-China Free Trade Agreement places Australia at a competitive disadvantage, the impact of NZ's tariff advantage is expected to be subtle in 2014, due to NZ's anticipated lower production," McRae said.

 

In contrast to China, the US takes more high value cuts, and McRae tipped the biggest growth to the US market to come in the form of chilled product.

 

Overall Aussie lamb exports were forecast to bounce another 7% to the US in 2014 bringing the total up to 42,000 tonnes. This would be the highest calendar year total since 2007.

 

The flourishing competitive advantage afforded by the lower Australian dollar (against the US dollar) also helped push up demand.

 

Meanwhile, the long-term trend for exports to the US has been toward chilled product, and in 2013 it accounted for 45% of the total for that market.

 

McRae said most of the high value lamb cuts exported to the US went to the north-east of the country, where per capita lamb consumption is almost double the national average.

 

By cut, lamb legs should easily maintain the position as the largest volume export cut to the US and in 2013 more than 12,000 tonnes was shipped.

 

As Australia's largest export lamb market, the Middle East is forecast to take about 61,000 tonnes in 2014 which was a lift of about 2% on 2013 totals.

 

McRae said the economic outlook for the broader Middle East region was positive. More than 70% of the lamb exported to this market has been in the form of whole carcases and this demand was anticipated to continue in 2014.