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Tuesday, January 09, 2018

January is BBQ lamb season.

By Angus Brown  |  Source: ABS, DAFF & ACA

Key points

  • Australia Day lamb demand is being cited as a reason for stronger prices in January.
  • Domestic per capita lamb consumption is down, but the fall for January is weaker than the annual.
  • The proportion of lamb consumed domestically is higher in January more so now than in the early 2000s.

2018-01-09 Sheep Fig 1

2018-01-09 Sheep Fig 2

It’s that time of year again when Meat and Livestock Australia (MLA) launch their Australia Day campaign. We haven’t seen the ad yet, but thought it would be interesting to see if there is any increase in consumption in recent years as a result. Australia Day demand is definitely starting to become something which is talked about in lamb markets.

We’ve been talking about the January slaughter spike in recent articles. The spike in slaughter appears to be demand driven, especially in years when lamb supply is a bit tight. Last year there simply weren’t that many lambs around in January, and prices rallied strongly.

Australia Day lamb demand is starting to be talked about in lamb markets, with supermarkets apparently keen to secure supplies and keep lamb on the shelves. 

To see if we could find some indication of increased demand, we took lamb production from the Australian Bureau of Statistics ABS stats, adjusted them for retail and shipped weight, and deducted exports. This gives a rough idea of monthly domestic lamb consumption.

According to figure 1, January is a big month for lamb consumption. It seems January has been peak BBQ season for some time, but domestic consumption of lamb has risen in the last 15 years. To see if MLA’s campaign has an impact we can compare domestic consumption. For the five years to 2005, prior to the start of the campaign January domestic lamb consumption was 16,751 tonnes. For the last five years, consumption was 6% higher, at 17,835 tonnes. 

The increasing Australian population has, however, seen increased annual lamb consumption increase, but only by 4%. Additionally, over the last five years January has been the biggest domestic consumption month. From 2001-2005 October was the biggest month, with January coming second.

On a per capita basis lamb consumption has been falling. Over the last five years Australian’s have eaten 8.05 kgs of lamb each. This is down 11.6% on 2001-05 when per capita consumption was 9.11kgs. Australians now eat 760 grams of lamb in January, down 9.8% from the 840 grams of 2001-2005.

The last chart we’ll look at is the proportion of lamb produced which is consumed domestically. Figure 2 shows that over the last five years 55% of January lamb production has been consumed here. The next highest is August at 49%. With lower production and weaker export back in the early 2000’s, domestic consumption was much higher, but January’s 68% was only two points above September, at 66%.

What does this mean?

Based on the rough domestic consumption evidence here we can say that while January has traditionally been a big month for lamb, the MLA campaign has made it even bigger. The stronger lamb consumption in January is now more accentuated than in the past. Additionally, the proportion of lamb consumed here is much stronger than the rest of the year.

For growers, this basically means domestic slaughter demand should remain strong for the next week and a half, with the possibility it might ease in February. For prices we know export demand has been driving the market late in 2017, and it will hopefully continue to drive the market once Australia day has been and gone.

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