By Matt Dalgleish | Source: DAWR
The Department of Agriculture and Water Resources (DAWR) release of the May lamb export figures show a continuation to the robust pattern set earlier in the year. Despite a decline in volumes to the US, since February 2016, total shipments of lamb have been maintained due to solid and steady demand from the Middle East and Asia.
Figure 1 highlights the seasonal pattern in lamb exports this year showing a rather resilient trend with total shipments of 21,562 tonnes swt for May. This represents an 8.6% lift in volumes from May last year and places it 17.3% above the five-year May average. Given that the shaded green area reflects the “normal” seasonal variation that can be anticipated in the series the fact that it has tracked above here since January is indicative of the solid export demand seen for lamb this season, assisted by a more favourable A$ level.
As indicated in the March lamb export article consignments to the US were expected to decline heading into the Australian winter, following the normal seasonal average pattern, to reach a trough between July-August near the 3,950 tonne region. The figures reported for May 2016 of 4,297 tonnes indicate that the 3,950 tonne level remains a credible target level, but could get as low as 3,750 tonnes.
Despite the anticipated slide in lamb export volumes to the US the total consignment numbers remained buoyant due to sustained demand from the Middle East and Asia, or more specifically China. Figure 3 demonstrates that the 2016 pattern for lamb export volumes to the Mid-east continues to hug the upper end of the “normal” seasonal range with the May figure of 5,953 tonnes swt, a mere 20 tonnes above the May 2015 level, and sits 23% over the five-year average for this time of year.
Figure 4 highlights the consignment of lamb to the whole of Asia which shows the May 2016 volume of 6,920 tonnes swt tracking above the five-year average for May by 15.7% and is 35.1% higher than the 2015 level for May. The strong Asian pattern is supported by the Chinese lamb export volumes for May of 3,813 tonnes swt, which represents a 30.3% increase on the five-year average and is 51.7% above the May 2015 level.
As shown by the average seasonal patterns in figures 1, 2 and 4 it is not uncommon to see a decline in lamb export volumes to these regions as we head into tighter winter lamb supply in Australia. This pattern is particularly present in the US and Asian average pattern, whereas the Middle Eastern pattern tends to peak during July-August.
Given the normal seasonal movements it is reasonable to expect the US lamb export volume to reach a trough this season near the 3,750-3,950 tonne level. Total Asian consignments of lamb appear likely to bottom out around the 5,550-5,750 tonne area, while Middle Eastern demand should find a peak at 6,650-6,850 tonnes.
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