Aus red meat production steps up a level 

In August, Australia shipped its largest ever monthly volume of sheepmeat, having made no secret of the fact that it is chasing after New Zealand for the top export slot.

New Zealand’s red meat exports have faced significant competition from increased Australian exports this year. 

Unfortunately, Australia’s red meat production has continued at a rapid pace through the second half of 2023 and is expected to disrupt export markets for some time.

Australia’s eastern states averaged a weekly lamb slaughter rate of 386,000 head last month, compared with 360,000 head per week last year, well exceeding the five-year average of 320,000 head for August. 

This surge in throughput boosted Australia’s lamb export volume to 31,800t in August, the highest monthly volume ever recorded, surpassing New Zealand’s August exports by 12,000t. 

The 2023 sheep projections of Meat and Livestock Australia (MLA) noted that Australia was hoping to become the largest sheepmeat exporter in the world, overtaking NZ to reach the top spot.

Year to date, Australia’s lamb exports total 205,111t, a 10% increase on the previous year’s historic high. NZ has shipped a total of 205,400t over the same period, which is over 3,000t less than the same period last year. 

Australia hasn’t overtaken NZ yet, but it is heading in the right direction, based on recent results.

While new season lambs are now entering the market in Australia, there’s still a surplus of old season lambs to be processed. This oversupply has pressured prices.  

At AU$4.56/kgCW, the National Trade Lamb Indicator (NTLI) is currently at a level not seen since January 2014. This is AU$2.89/kgCW less than this time last year and AU$3.47/kgCW below the five-year average. 

This means Australian farmers are receiving nearly NZ$2/kgCW less for their lambs than their New Zealand counterparts. The downside of this is that it allows Australian exporters to offer lamb cuts to export markets at more competitive prices.

The successful flock rebuilding efforts in Australia have enabled farmers to breed replacements and cull older ewes.  As a result, mutton slaughter in Australia’s eastern states remains elevated.

In August, weekly sheep throughput ranged from 109,000 to 137,000 head, a significant increase on the less than 90,000 head per week for the past three years. 

During August, Australia exported 15,900t of mutton, bringing the total for the calendar year to 132,300t, up from 88,500t during the same period last year.

Australia’s eastern states’ beef production has also surged. Weekly cattle throughput in the eastern states reached 114,000-121,000 head last month, compared to 90,000-100,000 per week in August last year. Australia exported 102,000t of beef in August, the highest since December 2019. 

The latest data from the Australian Bureau of Statistics indicates that during the second quarter of this year, Australia’s female slaughter rate (FSR) rose to 48%, up from 42% in the preceding quarter. An increased FSR suggests that few females are being retained, signalling that the Australian cattle herd is no longer in a rebuilding or growth phase.

Farmers in the eastern states are preparing for dry conditions throughout the spring, which is increasing the heightened slaughter bookings.

The increased supply of cattle has also pressured store cattle prices. The Eastern Young Cattle Indicator has fallen by AU$1.19/kgCW since July, reaching AU$4.40/kgCW this week. The last time it was at this level was March 2019. In stark contrast, this time last year the indicator stood at AU$10.49/kgCW amid more favourable conditions.

The Australian Bureau of Meteorology continues to issue an ongoing El Niño Alert. The long-range forecast is for warm and dry conditions across most of southern and eastern Australia from October to December. 

As a result, slaughter throughput is expected to remain high for the remainder of the year, fuelling export volumes.