The US has held the mantle as our largest market for lamb exports since lambs got very expensive back in 2020. As a single destination, they are still the largest importer, but last year Australia sent more to the Middle East region. The US is very important in putting a floor in prices, so we’ll have a closer look at the market.
After
experiencing a decline in demand during 2023 lamb demand in the US has bounced
back strongly. Figure 1 shows that
Australian lamb exports to the US have opened 2024 back at close to record
levels.
The raw
figures compared to last year make for interesting reading. The first quarter of 2024 has seen 44% more
lamb exported to the US. The 20,500
tonnes exported is 25% more than the five-year average, and 20% stronger than
the previous record for the quarter, set in 2022.
Figure 1
shows the lull that occurred in 2023, which was economically and demand-driven,
and seems to have been a blip. US lamb
demand is returning to the previous rising trend.
The US
domestic sheep flock continues to shrink, but it’s already very small compared
to ours. The United States Department of
Agriculture (USDA) reported the 2023 lamb crop at 3.03 million head, down 2% on
2022.
Some very
rough calculations put Australian lamb exports to the US on track to be the
equivalent of 4 million head. It’s
likely the US import more of our lambs than they produce themselves. This is why shifts in demand at the consumer
level can have such an impact on prices here.
Figure 2
shows how much lamb and mutton are in cold storage in the US. In February the amount of lamb and mutton in
cold storage hit a new 12-year low, with only a slight improvement in
March. This is at a time when lamb
imports from Australia are close to record highs.
In terms of
price, US domestic lamb values are much higher than last year. The USDA quoted March lamb prices at $1.95/lb. This was 40% higher than March last year. In our terms, the US lamb price is above
1400¢/kg cwt.
The
imported lamb prices haven’t had the same increase, largely due to strong
supply. Chilled racks are being quoted
at $13/lb, and legs around $3.75/lb.
These prices are similar to or slightly higher than this time last year.
What does it mean?
There is little doubt that demand for lamb in the US is stronger. With much stronger volumes and steady prices a good indicator. The strong supply out of Australia is keeping a lid on price increases. With cold storage levels low in the US, there is potential for strong price rises if supply tightens from the farm end locally.
Key Points
- After weakening in 2023, US lamb export volumes and demand have improved markedly.
- US lamb and mutton in storage is low, and lower US flock numbers are in decline.
- Lamb export prices haven’t moved yet but should with tightening supply.
Click on figure to expand
Click on figure to expand
Data sources: MLA, USDA, DAFF, Mecardo
