There was a massive spike in mutton exports in October. The confluence of weaker lamb supply, increased slaughter space, and a wide gap between lamb and sheep values at the saleyards saw a lot of sheep head overseas. This begs the question in the title, are we liquidating the flock and sending it to China?
Figure 1 shows the huge lift in mutton exports in October. The raw
numbers are significant. Mutton exports were over 27,000 tonnes, 25% higher
than September, 35% higher than October last year and 63% more than the five-year
average.
The last time monthly mutton exports were this strong was way back in the
mid 1990’s. Even during the flock
liquidation of the most recent drought, in 2019, mutton exports only reached a
peak of 20,100 tonnes.
China took a large chunk of the higher mutton exports, accounting for over
half of the total, and up nearly 70% on October last year. Traditionally, October is the peak month for mutton
exports to China, but the increase this year has been extreme.
Malaysia was also a major mover, receiving a near-record amount of
mutton, and 11.6% of total exports. There has been some weakening in demand from
the Middle East, with mutton exports more than halving since May. The extra
competition from China and Malaysia are likely having an impact.
With so much mutton being exports, surely the Chinese are literally
eating into the flock. Figures 1 and 2 show East Coast and WA sheep slaughter
which ran 42% and 49% higher than last year respectively.
State-based flock sizes are hard to find. For the sake of this analysis,
we can use the total flock number from MLA’s projections, of 79 million, and
the estimate of WA flock proportion at 19% from the producer intentions survey
to give us a WA flock of 15 million head. This leaves the East Coast with 64
million head.
A bit of extrapolation puts annual sheep slaughter on the East Coast at 12%
of the flock and in the west 11%. The big
liquidation years of 2018 and 2019 had mutton slaughter at 13-14% of the flock,
while a rebuild year is typically 10% or under. This differs from east to west,
with the rubbery flock numbers in the west, and the weight of absolute
slaughter figures suggesting they are in a heavy cull.
What does it mean?
The big export numbers appear to be driven by the sheer size of the flock on the east coast, and a liquidation in the west. It needs to be remembered that the flock did gain 15 million head from 2020 to 2023, and some of these sheep are reaching their culling age.
Key Points
- Mutton exports hit a 30-year high in October, with China and Malaysia increasing imports.
- The strong increase in mutton exports and slaughter looks more due to high flock numbers than a liquidation in the east.
- A WA flock liquidation is also driving strong mutton export numbers.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: MLA, ABS, Nutrien Ag Solutions, Mecardo
