Shifting sheepmeat opportunity?

Mutton exports for 2023 have reached levels not seen in decades. December’s data hasn’t been released yet, but even without the 12^th month, 2023 is the largest year of mutton exports since 2000. January to November monthly export totals averaged 27% above the long-term average, or 4.4kt more mutton exported each month.  

The extra volume of mutton being exported is predominately heading for Asia. China, the largest importer of Australia’s mutton increased their quantity by 73% on 2022 amounts (Jan to Nov). The Middle East also increased its intake by 86%, with Saudi Arabia increasing its volume by 91% on 2022 and the United Arab Emirates by 60%. The United States is a smaller customer and had a decline in mutton exports from 2022 to 2023, falling by 8%.

There is no question about the long-term opportunity for Sheepmeat demand. Consumption globally is on the rise as developing countries increase their meat consumption and consumers in wealthier countries become more familiar with the product. OECD-FAO expects global sheep meat consumption to increase by 15% to 18.1 million tonnes (MT) over the next decade.

Australia’s recent free trade agreements with India and the United Kingdom have improved the opportunity for Australian agricultural products such as mutton, through the removal of quotas and tariffs. The FTA with the European Union is still in the negotiation stages, but these agreements could add more upside for the demand side.

Throughout the 2023 season, total mutton exports trended above the 2022 season and the 5-year average (Figure 1). The percentage change year on year between the 2023 and 2022 seasons was highest in June, which had a YoY increase in total mutton exports of 73% (up 7.5kt from 10.1kt). This is traditionally a time when mutton exports typically reach their yearly lows as sheep supply drops off through winter.

The Australian flock has been through a growth phase, rising from 63.5m head in 2019/20 up to 70.2m in 2021/22 according to the ABS. Slaughter rates have also been increasing for mutton with the monthly average reported by MLA NLRS for 2023 up 17% on the 5-year average. This level of supply, combined with demand-side challenges triggered the downward price trend since July 2022. The National Mutton Indicator (NMI) fell from 600c/kg to as low as 102c/kg in late 2023. However, the latest export data shows that our overseas customers have been willing to soak up the additional supply at this new cheaper price point.