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Friday, April 08, 2016

Lamb exports marching along in good form

By Matt Dalgleish  |  Source: DAWR

Key points

  • A drop in lamb exports to the US for the month of March compensated by increases to Asian and Middle Eastern volumes to see total exports 1.5% higher on the month.
  • Overall, lamb export figures to the US remains very robust despite the chance of a decline in volumes due to seasonal conditions and the outlook for the year remains strong when compared to longer term averages.
  • Lamb exports to Asia and the Middle east continue to display a strong pattern with volumes closely mirroring the 2015 season. 

2016-04-06 Lamb Fig1

2016-04-06 Lamb Fig2

2016-04-06 Lamb Fig3

The Australian lamb export figures for March posted a 1.5% increase from February to see total exports of 22,588 tonnes swt reported by the Department of Agriculture and Water Resources. Despite an 11.6% reduction in lamb exports to the US from last month total lamb exports are still displaying a strong start to the year.

The March 2016 lamb export figures are the third highest monthly total, a mere 3.5% below the second highest monthly total also posted in March during last season. Asia remains the top export destination holding 29% of market share with the US and the Middle East sitting at equal second place on 25%.

Taking a closer look at the recent lamb export patterns of these big three destinations we will begin with the aforementioned dip in monthly exports to the US as highlighted in figure 1. Clearly, the trend established for the 2016 season remains robust despite the March decline in volume. Lamb export to the US during March of 5,172 tonnes swt sits 17.8% higher than this time last year and 41.7% above the five-year average for March.

In addition, steady monthly increases to lamb export figures to Asia and the Middle East during March acted as a buffer to the lower US results. The normal seasonal pattern of lamb exports to the US shows an average decline from February to August so it is likely that volumes to the US will display a similar decrease over the coming months. Although, given the high starting base this year overall volumes should remain robust compared to recent seasons.

Lamb exports to Asia are mirroring the pattern set in 2015, albeit marginally stronger, buoyed by steady increases in volumes to China. Total lamb exports to Asia reported at 7,168 tonnes swt, which equates to 538 tonnes above the February 2016 tally, 3.5% higher than March last year and 29.9% above the five-year average – figure 2. Lamb exports to China displaying a similar pattern with a monthly increase of 468 tonnes to see March post a figure of 3,787 tonnes swt, 11.8% higher than in 2015 and 43% above the five-year average.

Lamb export numbers for the Middle East similarly robust with the current season’s pattern tracking along the higher end of the “normal” seasonal range – figure 3. Although the lamb export figures for March 2016 were 11.9% below the 2015 result the overall trend is still strong with the current monthly total of 5,836 tonnes swt still above the longer term average March figure by 31%.

What does this mean?

Seasonal average patterns indicate that lamb export volumes to the US should drift lower over the coming months to bottom out around July/August between 3,950 – 4,250 tonnes swt. Despite this softening in lamb export volumes to the US the 2016 season should still be stronger than seen in previous years.

Seasonal average patterns for lamb exports to the Middle East point to increased monthly volumes that usually hits a monthly peak in the middle of the year with current estimates of the peak between 6,500 – 7,000 tonnes swt. The average seasonal pattern for lamb exports to Asia is less clear so a close eye should be kept on movements in volume, particularly to China, in order to determine how the season will eventuate.

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