Changing Chinese tastes for sheep meat

The release of Department of Agriculture and Water Resources (DAWR) trade data this month shows a continued surge in demand for Australian lamb from Chinese buyers. Indeed, the first quarter trade volumes show a distinct shift in preference for Australian lamb over Australian mutton.

Figure 1 shows the lamb export volumes for 2017 sitting at 49% above the seasonal five year average levels for this quarter. Volumes increased again for March to 4,477 tonnes swt, just shy of the record high in June 2016. This is deviating from the usual March drop that occurs towards the seasonal trough.

The story for sheep exports to China tells a completely different tale in Figure 2. The total volume exported over the first quarter of 2017 was nearly half of that two years ago, begging the question, is China’s appetite for sheep meat changing or are relative price differentials between lamb and sheep encouraging the shift?

To delve a little deeper into the question, in Figure 3 we have lined up the change in mutton and lamb export volumes from 2015 to 2017 for the season so far. Interestingly, we can see that where mutton volume has dropped off very closely aligns with increases in lamb consignments. Particularly in the months of January and March, there is a near exact shift in volumes from the one sheep meat to the other.

Chinese consumers have always had a strong affinity to lamb, however, it’s likely that the demand will only continue to rise with the changing demographic. The growing middle/upper income class and open food culture of the younger population is prompting a shift in taste towards ‘premium’ import meats. Where historically cheap proteins for the hot pot were in high demand, the ‘foodie factor’ is taking over, with consumers in China willing to pay a premium for quality and a sense of superiority on their fork.

What does it mean?

Our current sheep meat export prices may also be playing a part in the changing trade trends within China. Over the last season, the basis of the spread between mutton and lamb has narrowed significantly. In 2015, we had the price of mutton at around 50% of lamb but now we’re seeing the mutton price close in.

The NMI is even fighting against the typical seasonal drop, so far holding steady and still close to record highs of 2011. It could be that the reducing price differential between mutton and lamb is also encouraging the shift in consumption choice towards the premium meat as Chinese consumers are more willing to buy for quality.

Have any questions or comments?

We love to hear from you!

Key Points

  • Australian lamb exports volumes to China are at 49% above the seasonal five-year average and is being shadowed by a decrease in mutton exports
  • Growing middle class wealth and increasing in interest for premium products in China is a potential cause for the shift in demand from mutton to lamb
  • A narrowing price gap between sheep meats may also be a contributing factor

Click on graph to expand

Click on graph to expand

Click on graph to expand

Data sources: DAWR, Mecardo

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services
sheep
Sheep

Release the lambs

It’s not only Melbournians that have been released outside the front gate, last week Victorian saleyard throughput figures saw a jump in the number of

Read More »
Percentiles with a background image of hay bales
Cattle

Percentiles – October 2021

Mecardo’s Percentiles update for October 2021. Click below to view the latest report Grains Oilseeds Sheep and lambs Cattle Wool Dairy Fuel Percentiles are an important

Read More »

Don’t have an account with us? Join free.

You can have full premium access to all of our content with a monthly or annual subscription. 

Alternatively, create a free account to access our Insights blog and two free premium article a month!

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
Listen to the podcast

Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.

Photo of a farmer surrounded by Merino sheep in dusty yards
Research: Analysis of the Australian sheep flock

In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making. 

Image of harvested grain pouring into a chaser bin
SERVICES AND CAPABILITIES STATEMENT BROCHURE

We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.