Export values hit new highs

Australian boxed red meat exports have reached A$4.34 billion for the year-to-April, up a significant 26% on the same period for 2018. This is first time past $4 billion and only the second time exports have exceeded the A$3.5 billion mark for the first four months of the year. This large increase has been driven by drought-induced stock turn off, strong demand from many key export markets and a dropping Australian dollar assisting the competitiveness of Australian exports. Despite the strong start to the year, supply is expected to tighten across both beef and sheepmeat as the year progresses, particularly if there is a significant break in the weather.

The US remains Australia's most valuable export market with China, on the back of 87% value growth so far this year, currently the second largest market (driving factors discussed in previous articles).

Beef

Australian beef exports reached A$2.95 billion for the year-to-April, up 27% on last year and surpassing our previous high in 2015. This was partly driven by surging supply, but also strong export prices, which are up 11% on year-ago levels to A$7.82/kg.

Australia's largest market for boxed beef exports remains Japan, however both the US and China are close behind, on the back of significant market growth so far this year, increasing 29% and 89% respectively. The split of exports to these three markets are quite different, highlighted by the difference in the proportion of chilled exports to each with China at 13%, US with 38% and Japan 59%. Other markets that have experienced strong growth include South Korea, Indonesia, Taiwan and Saudi Arabia.

Lamb

The value of the lamb exports has increased 32% on last year to A$ 937 million for the first four months of 2019. Strong international demand, supressed competition from NZ, a depreciating Australian dollar and the impacts of the drought on supply and domestic saleyard prices have all contributed to this surge in value. Almost every region has experienced some level of year-on-year growth, apart from the EU (down 18%) and Japan (down 5%). Lamb export values averaged A$8.79/kg, a lift of 11% on 2018 and 16% higher than the five-year average.

North America continues to be the most valuable market for lamb, with the US importing A$289 million so far in 2019. China currently is the largest volume destination for Australian lamb. However, only 13% (in value) of Chinese lamb imports from Australia are chilled versus 65% of lamb exports to the US, which contributes to the US market being almost twice the value of China currently. There have been some movements in this trend, as the value of China's chilled imports from Australia increased at 76% versus frozen imports up 61% year-on-year.

Mutton

The total value of the mutton market for 2019 year-to-April was A$388 million, representing the third year in a row where there has been positive growth for the first four months of the year. The majority of this growth can be attributed to the Greater China region, which has experienced an 86% increase in exports on last year. This robust demand is helping drive strong prices for sheep domestically with mutton going above 600¢/kg for the first time ever in May this year.

Goat

Goat exports for the year-to-April have declined 19% compared to 2018, on the back of dropping supply. This is the lowest start since 2014 and 23% below the five-year average. North America remains the largest market, however export values are well down from the 2017 peak. Declines in export values have also been seen in Greater China and South Korea, however Trinidad and Tobago and Canada have seen some strong year-on-year growth.

© Meat & Livestock Australia Limited, 2019