Global Lamb Market – Oceanian exports pivot as China’s demand looks to shape 2025 market

• Global sheep meat exports increased, with Australia seeing a 16% rise in 2024, but volumes are expected to decline in 2025.
• New Zealand’s sheep flock decreased by 3% in 2024, impacting production and exports into 2025, yet exports to the UK and US are significantly up.
• EU sheep meat production dropped 9% year-on-year in 2024, with imports expected to remain under pressure in 2025.
• Chinese sheep meat imports fell 17% year-on-year in 2024, likley putting downward pressure on global prices in 2025.

Australian exports of sheep meat have grown considerably in 2024, an increase of 16% year-on-year (January to October) . This was driven largely by increased production, with 2024 set to be a record year for lamb and sheep slaughter and Q2 of this year the highest on record. This is likely a result of 2023’s peak flock numbers followed by some liquidation of the herd in 2024.

Ewe slaughter in the region has increased 17% year on year, meaning higher supplies in 2024 but with potential implications for the breeding flock looking forward. Lamb slaughter has lifted in 2024, at an increase of 11% year-on-year (Jan to Sep). Yet Q3 of 2024 is starting to see declines in volume which we are likely to see continue into 2025.

Yet, export prices for Australian sheep meat have started to recover in 2024, up 6% year-on-year, supported by strong exported demand from both the Middle East and the US. The Middle East and North Africa now account for 30% of Australian sheep meat export volumes, an increase of 2% vs 2023.

Moving into 2025, Australia is likely to make use of these new markets to offset potential declines, with opportunities in the Middle East and North America. However, this is balanced with the tightening Australian supply and could benefit UK producers by reducing competition in key markets, potentially supporting stronger prices and export opportunities. Yet, this is majorly dependant on future Chinese demand.

Production in New Zealand has been slightly down, driven by a continued downward trend in sheep flocks with spring 2025 flock expected to be 5.2% smaller than spring 2024. This trend is likely a result of land use changes towards urban sprawl coupled with falling profitability for sheep farms.

Domestic prices have fallen to a seven-year low in 2024 driven by strong Australian production and reduced demand from China as its export share fell from 55% last year to 43% this year YTD (Jan-Oct). Overall, this has represented a 24% year-on-year decline in volume exported to China (Jan to Oct). Together with recent rises in farm costs, this has contributed to on farm profitability pressures .

Subsequently, exports to the UK and US have seen significant increases of 47% and 30% respectively over the same period with trends suggesting this is likely to continue into 2025 depending on domestic supply and global demand, particularly from China.

EU sheep meat production has continued to fall, down 9% year-on-year (Jan to Sep) driven by smaller flocks (-2%) and a lower slaughter (-3%) coupled with disease pressures. Although producer prices are considerably higher than 2021 (+44%), consumption has remained relatively steady, down just 0.6% demonstrating resilient demand.

Imports have declined year-on-year by 4% (Jan to Sep) largely due to the increase in price – and reduced supply – of UK sheep meat, the EU’s main import market. UK sheep meat imported to the EU has fallen by 13% over the same period.

New Zealand lamb has been able to increase its share of the EU market from 40% in 2023 to 44% as of October this year largely due to the favourable price differential and lower demand from China.

Moving into 2025, further reductions in domestic production are expected however demand is likely to remain buoyant with an increase in per capita meat consumption driving import markets.

Consumption of sheep meat in China remains on the rise however this is at lower prices. Farmgate prices have declined for 7 months in a row, due to overproduction in recent years. This has led to an increasing number of farmers losing money.

As a result, Chinese sheep meat imports have declined by 17% year-on-year (Jan to Oct) down over 60,000 tonnes. Weaker China has limited price gains on the global market, alongside strong output from Australia. Meanwhile, strong prices and demand pull in Europe and the US have influenced Australia and New Zealand to pivot more towards these markets.

However, market reports point to a stronger economic position for China in 2025, as well as weaker domestic production due to unprofitability. This is expected to lead to slight recovery in Chinese import demand. With China’s significant impact on the global sheep market, any recovery in demand in 2025 is likely to support key exporters in Oceania and may offer support to global prices overall.

• Australian production and exports may decline from record highs, but recovery in export prices and firm demand in the Middle East.
• New Zealand's continued flock decline and reduced reliance on China will encourage diversification towards Western markets.
• In the EU, constrained domestic production and reduced UK imports will support further opportunities for New Zealand exporters.
• Although China has weakened its import demand in 2024, a potential economic recovery from China on the horizon could increase imports in 2025, strengthening global prices.

• In 2025, domestic trends in the UK will continue to have the most immediate bearing on price. However, upward drivers in global markets may add support to prices in the round.
• New Zealand and Australia are expected to retain focus on European markets and away from China, given market dynamics and trade access. This may increase export competition for the UK. However, production losses in New Zealand may offer upward pressure to price and limit export growth.
• Tighter supply in Europe may offer export opportunity, however factors influencing domestic UK production such as disease risk remains a key watchpoint for exportable supply.

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