Rising Slaughter Rates Lead to Export Surge of Australian Lamb

Market & Price Trends
Published Jun 27, 2023
Increasing lamb slaughter rates in Australia has resulted in a rise in export. Losses in the United States (US) markets have been offset by growth in lamb exports to China, the United Arab Emirates (UAE), and South Korea. The free trade agreement (FTA) is also one of the attributes that allow Australia to increase lamb exports by eliminating tariffs. It is expected that demand will hold firm in the near term. While there is still some possibility of drought conditions brought on by the El Niño weather phenomenon, the Australian lamb sector is nevertheless optimistic that it will be able to fulfill global demand and increase export volume this year.

Australia's lamb industry has experienced an increase in slaughter rates, leading to a boost in exports. Australia has witnessed record-breaking slaughter from W1 through W25 of 2023 amounting to 9.2 million heads, an increase of 7% YoY compared to the same period in the previous year. Higher availability of feed and favorable weather have supported the recovery of herds, indicating positive growth in the industry.

Source: Meat and Livestock Australia (MLA)

Australia's lamb exports rose by 21% YoY to 180,858 mt in the first four months of 2023. China has emerged as the largest importer of Australian lamb, surpassing the US. The growth in lamb exports to China and the UAE has significantly boosted export volumes to record levels. South Korea has also experienced substantial growth, becoming the third-largest destination for Australian lamb in 2023. While Australian lamb exports to China rose by 27% YoY to 17,991 mt in the first four months of 2023 due to rapidly growing protein demand fueling strong export growth. Furthermore, the China-Australia FTA (CHAFTA) and the Korean FTA include the abolition of sheep meat tariffs by January 1, 2023, which is one of the driving factors of the increased demand for Australian lamb. Australia will have access to highly profitable markets thanks to this regulation, and lower tariffs will boost its global competitiveness.

Source: Australian Bureau of Agricultural and Resource Economics (ABARES)

Conversely, the US witnessed a decline in Australian lamb exports by 22% YoY to 17,095 mt in the first four months of 2023. Historically, the US is the main destination for Australian lamb. But economic conditions are taking a toll on US consumer spending, leading to lower demand for Australian lamb and potential substitution for cheaper proteins.

Although Australian lamb export volume was higher, export values for Australian lamb in the first four months of 2023 fell by 17% YoY to USD 991 million. Lower export prices outweigh higher export volumes, indicating global supply rising faster than global demand.

Despite that, it is expected that demand will hold firm in the near term. Given the increasing national slaughter rates in Australia, the country has boosted lamb exports for Eid al-Adha. In May 2023, Australia raised its exports to USD 130 thousand to Indonesia, while there were no exports in April. The UAE is also projected to increase demand for lamb from Australia due to Eid al-Adha. Not only that, but the Australia-United Kingdom (UK) FTA policy became effective on May 31 and this policy will also take advantage of Australia to increase the quota of lamb meat to the UK.

The Meat and Livestock Australia (MLA) is expected to achieve lamb national slaughter of 22.63 million heads in 2023, an increase of 6% YoY. Despite uncertainties, such as potential drought conditions caused by the El Niño weather phenomenon, that pose a risk, the Australian meat industry remains optimistic about meeting global demand and achieving higher export volumes for this year. 

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