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Thursday, July 23, 2015

Live sheep exports steady, based on WA supply

By Angus Brown  |  Source: ABS, MLA's NLRS

Key points

  • Live sheep exports have been steady around 2 million head in the last three years, halting a 10-year decline in volumes.
  • Weakening demand from some export markets, along with limited east coast supply, appears to be responsible for declining live export volumes.
  • Live export remains an important market for sheep, especially in WA where the market underpins sheep prices.


2015-07-23 Live Sheep Exports FIG 1

2015-07-23 Live Sheep Exports FIG 2

2015-07-23 Live Sheep Exports FIG 3

Live sheep exports have accounted for between 15 and 35% of sheep turnoff in Australia over the last ten years, with recent years seeing low live exports relative to slaughter. However, live export remains an important part of the sheep market, with prices helping to set mutton values in WA.

Live sheep export volumes have declined over the last ten years. This has generally been in line with the shrinking flock and subsequent weakening sheep supply (figure 1).  Since 2005, live export volumes have fallen by around 43%, but have risen marginally since bottoming out 2013. The last financial year is likely to see 6%, or 120,000, more sheep exported than in 2012-13.

The last three years have seen stronger sheep slaughter, but this hasn’t translated into stronger live export.  Figure 2 shows the Australian mutton live export and slaughter, with live export tracking just above the 2 million head per year for the last three years.  The proportion of sheep exported live has ranged between 17 and 20% for the last 3 years, well below the average of the previous 9 years of 28%.

The decline in sheep live export appears to be a factor of weakening supply of wethers, and possibly weakening demand.  Figure 3 shows the spread of export destinations, and the proportion of live sheep they take.  It should be no surprise that all the major live export markets are in the Middle East, with the UAE and Qatar significantly increasing demand in the last three years.  Kuwait’s share has declined and Saudi Arabia’s refusal to sign up to slaughter protocols has seen them disappear as a market.

In terms of supply, Fremantle stands way in front of the other ports of loading.  In 2014, Fremantle accounted for 84% of live sheep exports, with Port Adelaide loading 11.5%.  So far in 2015, Fremantle accounts for 86% of live exports.  Export from the east coast in the last two years have been minimal, with Portland shipping no sheep this year, and just 2.5% in 2014.

What does this mean?

The relatively strong demand and prices for sheep on the east coast seem to have deterred live exporters over recent years. The extra shipping cost for the east relative to WA and generally higher sheep prices have seen live exports being almost exclusively sought from the west. 

In WA, live export continues to underpin the sheep market, and is of critical importance to Merino producers in particular.  Live exports appear to have reached a sustainable level in recent years, largely based on WA supply. Any increase or decrease in demand will directly impact WA markets, with little short term effect on east coast values.  

Mecardo information is provided to assist in your marketing decisions. It contains a range of data and views on the current market. It is not intended to constitute advice for a specific purpose. Before taking any action in relation to information contained within this report, you should seek advice from a qualified professional. The information is obtained from a variety of sources and neither Mecardo nor Ag Concepts Advisory will be held liable for any loss or damage whatsoever that may arise from the use of information or for any error or mis-statement contained in this report. 

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