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Thursday, October 13, 2016

Mutton else matters (except flock size in the case of live exports)

By Katherine Bain  |  Source: MLA, ABS

Key points

  • Live sheep export figures have been fluctuating between 100,000 and 250,000 head this year.
  • Kuwait’s market share has fallen, while Qatar and ‘other’ countries have risen.
  • The total number of sheep exported from Australia have been falling since 2001, from 6.8 million to 1.9 million in 2015.

2016-10-13 Sheep Fig 1

2016-10-13 Sheep Fig 2

2016-10-13 Sheep Fig 3

Since the last report on live sheep exports, released by Mecardo in March 2016, consignments to the Middle East have been trending ahead of the five- year average pattern. This article will look at the breakdown of countries with the highest market share in Australian sheep exports and how the market has been looking over the long term.

Since March there have reasonably large fluctuations in the volume of sheep being exported each month, ranging from 100,000 up to 250,000 head (figure 1). As well as this, volume movements have been leading the normal pattern set by the five-year seasonal average trend. The average monthly exports so far for the year is at 157,855, which is 16% below the average export volume, and 11% below the volume for this time last year.

The number of sheep exported started to rally from May onwards this year, whereas it usually doesn’t start to increase until June/July. The volume peaked in August, roughly two months before where a peak would be anticipated (according to the pattern set by the average seasonal trend which usually occurs during September), at a volume of 245,339 head.

The early peak could be due to the good season, which is allowing farmers to hold onto stock for longer, thus limiting the supply to the export market. The relatively high prices for mutton and lamb may also be limiting demand from overseas, therefore reducing the total volume sent overseas.

The market share (figure 2) has changed slightly since March. Kuwait still has the highest market share, but has dropped from 37.1% to 30.1%, while Qatar has risen slightly from 26% to 28%. Other countries that import from Australia, including Omar and Israel have continued a strong upward trend, now at 19.2% of the market. Kuwait, Qatar and ‘other’ countries have been reasonably consistent purchasers of Australian live sheep throughout the season, with shipments recorded in every month. Kuwait and Qatar have averaged monthly consignments of 47,595 head and 44,222 head, respectively.

Overall, live exports aren’t what they used to be. Looking at live sheep exports over the last 15 years (figure 3), it can be seen that the total volume of exports has been declining at a steady rate. Since 2001, live exports have dropped 79% from 6,811,565 head to 1,420,696 head so far this year. The decline over the years could be due to the increase in chilled and frozen exports because of the rising wealth in the main importing countries or just mirrors the general decline in the sheep flock.

What does this mean?

Figure 3 indicates that export numbers somewhat mirror the total number of sheep in Australia. Live export figures loosely follow the flock numbers, with the exception of 2011, when it was possible that the high Aussie dollar was limiting export flows in general. Projections from MLA show that the sheep flock is coming into a rebuild stage, which may lead to an increase live export numbers in the coming years.

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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