Australian Sheep meat exports drop back

Thursday, 3 December 2020

By Charlie Reeve

Australian sheep meat exports have dropped back 11% year-on-year during the first nine months of 2020, a decrease of 39,000 tonnes to total 306,000 tonnes. China has continued to be Australia’s largest export destination accounting for 33% of Australian global sheep meat exports although trade has dropped back by 13% during this period.

One of the factors leading to reduced sheep meat exports from Australia has been the reduction in demand from the food service sectors from different export markets around the world. Australian farmers are also currently working to rebuild the domestic sheep herd, which is expected to limit supplies for export.

The volume of Australian lamb exports entering the UK market has fluctuated in recent years. Overall, there has been a general decline due to the UK becoming more self-sufficient for lamb and Australia focusing on the Asian market. However, so far in 2020 Australian sheep meat exports to the UK have been above both 2018 and 2019 levels based on the first nine months of trade for the year.

According to the MLA, the outlook for Australian prices may be limited in the short term due to a strong Australian currency and reduced demand. The longer-term outlook for Australia is more optimistic with several different market drivers likely to support prices, these include continued demand from the US and China, and the projected recovery of the food service sector both domestically and in their export destinations.

In summary, with the UK having been at significant price premium over Australia a few weeks ago, there is some potential for more Australian lamb to enter the UK market during Q4, especially with the current tariff free quota in place. However, whilst EU-exit negotiations are still in full swing and the outcome remains unknown, longer-term global trade flows are hard to predict.

Charlie Reeve

Analyst - Livestock

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