By Matt Dalgleish | Source: DAWR, ACA
It was only last month that we posed the question of whether the Chinese demand myth was becoming a reality with regard to export market growth potential, and figures released by the Department of Agriculture and Water Resources (DAWR) this week continue to show very robust demand for sheepmeat out of China as the 2017 season draws to a close.
Read earlier Chinese demand article here.
Figure 1 demonstrates the relatively firm finish to the season for lamb exports to China. Although the month to month change from November to December saw a decline of 13.5% in lamb consignments from 4,961 tonnes to 4,291 tonnes, the December 2017 figure was 40% higher than the five-year average for this time in the season and 14% above the December 2016 level.
Indeed, the decline in volumes from November to December isn’t too concerning given that November was the highest monthly flow on record and the December 2017 monthly consignment of lamb to China was still the sixth highest monthly total to date. The 2017 season was a stellar year for lamb exports to China with six of the top ten monthly volumes being recorded during this year alone.
The resurgence in mutton exports to China, particularly over the last quarter of 2017, is clearly evident in figure 2. Despite the similar 19.5% decline experienced from November to December as demonstrated by lamb flows, the December 2017 mutton consignment to China of 5,935 tonnes was still the third highest December flow on record and sits 29% above the five-year December average volume.
A look at the combined annual flows of lamb and mutton to China over the past fifteen years reveals much of the growth has occurred in the last five years – figure 3. A lull in mutton exports was experienced during 2015/2016 as Chinese mutton production growth outpaced consumption. However, we appear to be returning to the record export levels recorded during the 2013/14 seasons on the back of the strong recovery of mutton flows in the second half of 2017, as higher Chinese pork prices have encouraged a shift in demand back toward mutton.
Australia is the second largest sheep producer in the world, behind China. China holds the title of the worlds largest importer of sheepmeat, despite their top position in global sheep production. The import demand for mutton accounts for about five percent of total Chinese mutton consumption, with approximately 95% of imports originating from either Australia or New Zealand.
The recent lift in Australian exports of lamb and mutton to China has seen the proportion of Chinese consignments rise from around 15.5% during 2015/16 to nearly 21% of combined Australian sheepmeat export flows in 2017 – figure 3. A NZ sheepmeat industry that continues to lose acres to dairy and beef production means Australia will be in a prime position to capitalise on the anticipated growth in Chinese demand into 2018 and beyond.
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