Australian lamb consumption and perspective

There is current discussion about changes to lamb specification and it occurred to me to write up a story on some history of lamb and sheepmeat consumption in Australia. The key issue is the continued decline in lamb consumption to estimated current levels of 8.9 kilograms per head and 57% of carcase lamb production being exported.

In the 1973 ABS Yearbook, the section on agriculture and rural Australia contained the following statement: "in 1959-60, consumption of mutton and lamb at 103 lb per head of population, exceeded that of beef and veal for the first time on record." That is equivalent to almost 47 kgs per head. The graphic above indicates lamb consumption in 1972 at 54 lbs or 24.4 kgs per head of population. Exports as a percentage of production were only 12%. Current exports of lamb are highly successful and Australia attracts premiums and leading market position in many Asian countries as well as a major supplier to USA and Canada. While past glories of lamb consumption and promotion on the domestic market in Australia are behind us, it is our opinion that any change in lamb specification is unwise and could risk lamb's appeal in growing export markets and the very important home market in Australia. 

Saudi Arabia meat trade review

According to the WTO, meat and edible offal of poultry was the most important agriculture import to Saudi Arabia in 2015.

USDA projects Saudi imports of ready to cook weight of broiler will be 790,000 tonnes in 2017. Saudi Arabia is the third largest importer after Japan and Mexico.

Australian trade in red meat is displayed in below graphic. Carcase mutton is the largest component of the trade following by offal and beef. Australian chilled lamb exports exceed frozen lamb exports to Saudi Arabia and chilled beef exports from Australia are about half frozen beef exports.

The USA was re-admitted to supply Saudi Arabia with beef in July 2016 after being banned for 4 years.  Below graphic is FAO OECD projection of Saudi Arabia production by meat type:

FAO is projecting a higher level of poultry imports than USDA and a steady increase going forward. Sheep meat imports are forecast at 125,000 tonnes carcase weight in 2017, with beef imports 185,000 tonnes.

Saudi Arabia imported around 15,000 tonnes of goat meat according to UN Comtrade figures in 2015 with a value of US$79 million.

Saudi Customs and Statistics figures for February 2017 showed imports of chilled beef from Australia of 107 tonnes. The graphic below shows Brazil is the largest chilled beef supplier.

our preliminary work indicates no USA chilled or frozen beef was imported by Saudi Arabia in February 2017.

Frozen imports of beef are again headed by Brazil.

India was the second largest supplier of frozen bovine meat in February 2017 and priced at similar levels to import values of Australian frozen beef. Brazilian frozen beef import tonnage was 2,148 tonnes at a unit value of US$3.75 kg. Australia was third in line behind India and Pakistan in imports of fresh chilled lamb carcases into Saudi Arabia in February. Ethiopia was 4th ahead of New Zealand. Australia was the largest supplier of fresh bone in sheep meat in February out of only two suppliers, with New Zealand a way back. Australia supplied almost double that of New Zealand in terms of frozen sheep meat carcases. 

New Zealand was the largest supplier by value in bone in frozen sheep meat cuts in February 2017.

Australia, India, Brazil - April 2017 beef exports snapshot

We have the Indian, Australian and Brazilian bovine meat export numbers for April 2017 and it provides an interesting snapshot of how the competition is shaping up early part of this shipping year.

India is well ahead with over 97,000 tonnes of frozen buffalo shipped in the month of April. Mostly boneless in cartons. Range of specifications.

Brazil is next with over 70,000 tonnes in April 2017, down 16,000 tonnes on the same month in 2016.

Australia is ranked third in tonnage in April 2017, with just under 67,000 tonnes in the month of April 2017, a sharp correction in volume exported of almost 18,000 tonnes due to reduced cattle supplies and record prices in Australia.

 What is most interesting is the unit values per kg in USD. Total Indian buffalo unit value in April was US$2.86 per kg. This compares with Brazilian fresh frozen beef export unit value of US$4.16 per kg in April 2017. There is a notable rise in unit value in Brazil for fresh frozen beef of 11% compared with April 2016. Australian unit value for total beef exports are estimated from ABS trade figures and April 2017 beef and veal shipped weight and comes to US$6.01 per kg. All these figures are comparable as they generally refer to FAS or FOB ports of export. The total value of beef/bovine exports is also of interest, with India running at US$278 million in April, Brazil $403 million and Australia almost level with Brazil on lower volume at US$402 million.

We have also estimated some key market unit values for Australia based on import market statistics in the key markets of Japan, USA and Korea. Japan leads in unit value per kg at US$6.99 per kg.

Brazilian figures by key markets are not available for April 2017, however Jan-Apr 2017 is available in this link.

We have a preliminary estimate of USA fresh, chilled and frozen beef exports to all destinations in April 2017 of US$468 million. Our estimate of total fresh, chilled and frozen beef export volume for April 2017 is 70,000 tonnes. Unit value per kg is calculated as US$6.78 per kg.

Australia USA beef imports in selected Asian countries

Malaysia is a key market in Asia and the second largest market globally for Indian buffalo exports.

WTO trade graphic

Malaysian import statistics for the first 3 months of 2017 show Australia supplied MYR 72.4 million and, on current exchange rates, this amounts to almost $17 million USD of beef. North American beef supplies were minimal at MYR $173,000.

For the 2 months in 2017 available for the Philippines, Australia supplied USD$8.8 million for beef and USA USD$4.2 million.

The third market examined was Thailand. In 2017 Australia supplied USD$13.4 million for beef and USA USD$3.4 million.

Global cattle prices tracking by EU Beef Market Observatory

Yanks have sprinted to the head of the field and I am wondering if they can hold on. I hope so, as it augers well for US demand for beef and helps Aussie compete in Asia.

USA live steer prices in the USDA cattle dashboard are also in very high territory.

Formula net live cattle reported as $1.4154 per lb live weight. Very confusing in relation to futures markets as there is so little cash trade.

http://www.cmegroup.com/trading/agricultural/livestock/live-cattle.html

Yesterday's USDA Direct quotes topped around $1.32 US per lb live weight.
https://www.ams.usda.gov/mnreports/lm_ct100.txt

Argentina's slow climb back to major protein exporter

An article in local media points to efforts of Argentina to regain its market share in red meat exports globally.
"At the beginning of the 2000s, Argentina was among the top five beef exporters in the world, only surpassed by great cattle powers such as the United States, Brazil and Australia.
However, during the last 17 years he has lost positions in that global ranking to the point that for this year it already ranks it in number 11, surpassed by nations like New Zealand, Canada, India, or partners in Mercosur: Uruguay And Paraguay. According to a document from the United States Department of Agriculture (USDA), for 2017 Argentina is reserved the 11th place, with a level of exports that will be about 250,000 tons, when a total of 9,641,000 tons of beef. According to the official agency of the United States, the three largest global suppliers this year will be India with 1,850,000 tons; Brazil with 1,800,000 tons and Australia with 1,400,000 tons."
http://eleconomista.com.mx/industrias/2017/04/18/exportaciones-carne-bovina-argentina-siguen-baja

In February 2017, beef exports totaled 18 thousand tons of product weight, equivalent to 25 thousand tons of beef, implying an increase of 10 percent over the final figure of the previous month, which fell to 23 thousand tons Weight res In the first two months of this year, shipments have remained firm and relatively stable. This is a consequence of the evolution of both chilled and frozen meat.
http://www.abc-consorcio.com.ar/

Australian lamb continues to do well in US market

Australian lamb continues to do well in the crowded retail and foodservice market in USA. USA Australian lamb arrivals to week 14 2017 were up 11% to 18,526 tonnes. Australian lamb was 73% of total arrivals of 25,233 tonnes compared with New Zealand lamb 26%. Only minor supplies from Canada and Iceland have been recorded.

"With the Easter holiday this weekend, lamb and veal retail activity sharply increased by 53.2%. The feature rate followed suit with an increase of 19%, while the special rate also rose by 0.2%. Lamb retail activity index
showed an increase of 60.4%. The amount of roasts showcased shot up by 82.9% while the amount of chops featured sank by 26.7%. Leg cuts, both bone-in and semi-boneless, were the most widely advertised item among the lamb features this week as the general price trend this period was steady to firm."
USDA retail report

3,845 million pounds (1,744 tonnes) of Australian and New Zealand were traded wholesale in USDA report for April 17 2017.

US Beef Board figures for 12 months to February 2017 show lamb at retail had a sales value of US$405 million, a rise of 1%. This compares with sales value falling 3.3% for beef and 6.6% for pork. Lamb volume for the 12 months at US retail (based on scan data) was almost 58 million pounds. Unit sales value of all lamb sold at retail was US$7.03 per lb.