Frozen lamb export values softer after first five months of 2016

For the year-to-May (latest available value data), the value of Australian lamb exports was tracking 2% below where it was last year, at A$727 million FOB, despite the volume of shipments (104,859 tonnes swt) up 7% over the same period (GTA/ABS; DAWR).

Underpinning the lower values for the period, despite higher volumes, was the export unit value ($/kg) of Australian lamb averaging A$6.50/kg – down from A$7.22/kg the previous year. This is even though the A$ averaged 73US¢, down 5¢ year-on-year. The cause has been subtle shifts in the size of some export destinations, with more volume this year destined to some of the price sensitive markets like Pacific Islands and China – that is, the average unit value of shipments to the Pacific Islands was $2.96/kg and to China was $3.19/kg, each well below the $6.50 average. Also contributing to the lower values was a slightly higher proportion of Australian lamb exports in frozen form in 2016 (58% versus 57%). Nevertheless, while the unit values were lower year-on-year, they remain 1.4% above the five-year average.

Furthermore, the 7% increase in the value of chilled lamb exports (A$419 million) over the January to May period, assisted by a 5% rise in volume (43,737 tonnes swt), was not enough to offset the 11% decline in the value of frozen shipments (A$308 million). This was regardless of the volume of frozen shipments increasing 8% year-on-year, at 61,122 tonnes swt – again, of which most of the growth was to price sensitive regions.

For the year-to-May, compared to last year, the value of chilled lamb exports to:

• ·         The US increased 21%, to $151.7 million
• ·         The Middle East increased 6%, to $151.3 million
• ·         The EU declined 19%, to $22.8 million
• ·         Japan declined 5%, to $22.3 million
• ·         Canada declined 9%, to $18.2 million

The value of frozen lamb exports, over the same period, to:

• ·         The US decreased 8%, to $105.8 million
• ·         China declined 3%, to $46.6 million
• ·         The Middle East decreased 21%, to $32 million
• ·         South East Asia declined 3%, to $29.3 million
• ·         Papua New Guinea declined 6%, to $18 million
• ·         Korea jumped 25%, to $13.7 million

Follow link for further market commentary on lamb export volumes for the year-to-May.

For Australian lamb producers, the overall softer values are somewhat of a concern, however the positive rainfall outlook, combined with expectations of the A$ to remain in the mid to low US70¢ mark, the lamb market should remain in good stead for the remainder of 2016.