Bigger, and more Aussie lambs

The Australian National sheep flock is growing – up to its highest level since 2007, at 78.75 million head.

In Business4 Minutes

By Joanna Grigg

The Australian national sheep flock is growing – up to its highest level since 2007, at 78.75 million head. Exports are growing too. In February, Meat & Livestock Australia (MLA) reported it expects record lamb production and exports this year. There will be an extra 595,000 lambs to slaughter (2.7% more than 2022) and another lift in 2024.

Lambs are heavier. Carcaseweights are forecast to increase to 25.1kg. This would be 11% or 2.5kg/head above the 10-year average.

MLA market analyst Ripley Atkinson reported that as New Zealand sheep meat exports have increasingly shifted away from Europe and towards China, improved opportunities for Australian sheep meat in European markets may continue.

“The decline of the New Zealand flock size presents an opportunity for Australia to increase its market share,” he said.

While the base trend is for more competition to put downward pressure on schedules, Kiwi farmers should not see this as a full-frontal threat to market share and price, according to Rabobank analyst Genevieve Steven. NZ and Australia do share a number of markets, but the product and cuts being targeted do differ, particularly in the United States, she said.

Rabobank expects the NZ lamb schedule to continue to recover to just above the five-year average in the coming months – it’s currently sitting just under.

“New Zealand has actually taken market share off Australia in the US in the last few years, whilst Australian lamb supplies were recovering from the effects of drought.”

Steven said the US is a very important lamb market to Australia. NZ does compete there with higher-value cuts, such as racks, but NZ cut sizes are generally smaller.

While Australia could focus on Europe, Steven said Europe is still challenged by tough economic conditions. Additionally, Europe is a very small market for Australian lamb.

“We have way more quota into the UK and Europe than Australia, and we are currently not filling our EU or UK quota, rather, we are sending it to China because that is where demand has been.”

Steven said the US and China are probably the main markets where Kiwi lamb competes with Australian lamb. In 2022, 206,000 tonnes (t) of NZ sheep meat was exported to China at an average price of $7.65/kg FOB (free on board). This was down from $8.19/kg the previous year.

The Australians eat a lot of their own lamb. In 2022, of the 702,000t of sheep meat produced in Australia they consumed 207,000t – almost a third. About 340,000t of lamb was exported. MLA reported late February that the mutton slaughter was sitting at 59,000 head/week, or 52% above 2022 figures.

Steven said MLA is forecasting 22.6 million lambs to be slaughtered for 2022/23 compared to its Kiwi counterpart Beef + Lamb NZ’s forecast of 17.6 million in NZ.