Australian carcase lamb exports comparison

source: DAWR figures
In spite of a loss of market in Bahrain due to withdrawal of a government subsidy on lamb, Australia continues to ship very good quantities of carcase lamb of various specifications to markets in Middle East and USA. Middle East dominates and USA takes a significant volume of lamb in carcase form. It is still the most significant cut of lamb exported. Volumes in 2016 near level with 2015.

Australian farms and mapping technology

There is plenty of dialogue about the importance of farming to Australia.  It is also apparent there is a deal of ignorance and a substantial lack of data. But, give credit where it is due, Geoscience Australia and the Australian government agencies have done a wonderful job with the National Map of Australia and the homestead data.
The Australian Bureau of Statistics addressed the sector in a release this week
Agricultural Commodities ,below is their static map. Putting a value on these businesses produced an impressive figure. "Value of Australian farm production rises to $54 billion".

While the scale is small, each dot and concentration represents a farm business.

The National Map of Australia, including the homestead data set, looks like below:

National Map of Australia

The sale of Anna Creek Station (ex Kidman) to the Williams Cattle Company suggested a closer look at the location on the National Map.

The Williams Cattle Company have an impressive string of properties north of Anna Creek along the Oodnadatta Trak. Remote and challenging seasons wise but currently enjoying a very productive period.

Trends in retail meat prices China

When WH Group China released its prospectus for the takeover of USA Smithfield Foods in April 2014, they looked at the massive size of the Chinese pork industry and potential rises in per capita pork consumption. Chart below:

While the growth in Chinese pork consumption in the mass market has grown, a number of factors including the industrialization of the pork processing industry have impacted on the trade.

China Yurun Food Group, another pork and processed meat listed company, recently highlighted some industry trends in their interim report for 2016.

"However, in the first half of this year, affected by factors such as tight market supply, hog prices rose rapidly and increased significantly by approximately 48% compared to the same period last year to approximately RMB21.4

per kilogram, being the highest price in the past 5 years. 

During the Review Period, pork production in China amounted to 24.73 million tons, representing a decrease of 3.9% over the same period last year. During the Review Period, the number of live hogs production of China was approximately 402 million heads, representing a decrease of 3.7% over the same period in 2015; the number of hogs output was approximately 320 million heads, representing a year on year decrease of 4.4% as compared to the same period last year. As the hog farmers’ incentives to rebuild inventories resumed gradually and the supply should improve steadily, pork prices are therefore expected to decrease in the second half of 2016." In late November, the Ministry of Agriculture published their wholesale meat price trends and pork was quoted at 22.99 CNY per kg, 2.5% higher than 12 months earlier.

Pork is the largest meat consumed in China and prices are higher than chicken. Agriculture China latest wholesale price on slaughtered chicken is CNY14.40 per kg. That is equivalent to AUD S2.80 per kg.

Far higher prices for beef has seen some consumer resistance in the slowing conditions in the China market and Agriculture China latest (Nov 27 2016) wholesale price for beef is CNY 53 per kg, 1.9% down on the same month in 2015. Mutton prices have fallen a far more significant amount of 6.9%.

Retail price trends in China since 2013 shown below indicate the trend down in mutton prices, clearly separating from the level of beef over several months.

After the booming growth in the Chinese sheep meat market in 2013, with a jump of almost 40% in mutton retail prices along with sharp upturn in beef prices, mutton demand and prices have adjusted to more historical differentials with beef. Australian sheep meat exports to China have dropped from 97.423 tonnes in 2013 (MLA, DA) to 60,220 tonnes in 2015 annual and further adjusted to 47,824 tonnes year to date to October 2016.

BMI Agribusiness report for China Q4 2016 very clearly shows the far more competitive landscape for China beef imports, with Brazil product surging.

According to Brazilian export statistics, Brazilian beef exports to China Jan-Oct, have jumped from 61,260 tonnes 2015 to 132,383 tonnes in 10 months of 2016. Brazilian beef unit prices have dropped 14% from levels in the first 10 months of 2015. However, Brazil has also seen beef exports drop and in November 2016, the total fresh frozen beef was 75,800 tonnes, the lowest level since Jan 2015.

Tracking Australian heavy lamb cutout indicator trends in USA wholesale market

With seasonal easing of Australian heavy lamb prices, the current indicator was reported as $5.19 per kg national. Prices for chilled Australian lamb racks have held up and lamb shortloin prices have firmed.

We use a composite cutout of chilled racks and shortloins and the balance frozen lamb cuts as reported by the weekly USDA imported lamb traded, part of USDA mandatory price reporting.

These are wholesale prices in USD. 2.5 million lbs of Australian and New Zealand lamb was reported by USDA for 28 November 2016 (1,133 kgs). 1,108 tonnes of Australian lamb was entered into USA in week 48 (26/11/2016). Only 293 tonnes of NZ lamb was entered the same week. Year to date Australian lamb entries into USA are up 10% to 48,476 tonnes. Australia has achieved 70% of total imported lamb entering USA and a great deal of this product would be directed to foodservice.

The indicative trends are showing improved margins for Australian lamb as seasonal Australian lamb prices ease. Prices all is AUD$.

While there has been some easing in USA lamb prices reported from scan data to September 2016, unit prices have held up well considering the huge stocks of beef and pork in cold storage and volume of protein hitting the market. Unit value for Sept 2016 for all lamb at US retail was USD$7.35lb.(AUD$21.75 kg)