Jenny Kelly: US consumers key to Australian lamb market in 2022

Americans have a growing hunger for Aussie lamb — and the trend is expected to boost farmer profits in 2022. Find out why.

American demand for Australian lamb is on the rise.

Lamb exports to the US have ended the year in great form and this market will be key to how supply and demand pressures play out in the early months of 2022, as the industry faces up to a potential bigger flush of shorn lambs off stubbles.

Prices for all major lamb cuts in the American market have ended the year at much higher price points compared to 12-months ago, supporting claims the Covid-19 pandemic has reshaped lamb as a much more popular meat meal in the country.

Using data from the US industry’s mandatory price reporting system, the following lamb prices were recently calculated by Steiner Consulting.

AUSTRALIAN chilled lamb racks — trending between US$12.58 to $13.69 or around 60 per cent higher than a year ago.

AUSTRALIAN boneless chilled legs — US$6.20 or 45 per cent more.

AUSTRALIAN frozen shoulders — US$3.48 or 22 per cent higher; and

AUSTRALIAN frozen racks — up to US$12.60 or more than 80 per cent higher than last year.

While these figures were only released earlier this month, due to the lag time in collecting and

reporting it needs to be noted that the prices actually refer to late October.

However Len Steiner, Steiner Consulting, said spot market pricing had all been positive in the lead-up to Christmas.

“Imported lamb prices are now significantly above year ago levels,’’ Mr Steiner said.

“This is true for both traditional food service items, such as lamb racks, as well as lamb legs and shoulders.

“Port congestion issues have significantly limited the supply of chilled racks coming to the US (and in early December) prices for chilled racks jumped by up to 20 per cent and they are now as much as 60 per cent higher than a year ago.’’

And while values have lifted, the good news for lamb breeders is that the higher prices have been achieved on bigger sales volumes.

For the period from January to October (latest official import data from the USDA), there was

102,801 tonnes of lamb, mutton and goat imported into America.

This is 13 per cent higher than the same 10 month period in 2020, and more significantly, nearly 25 per cent higher than the five year average of sheepmeat sales to the United States.

It all supports the argument that Covid-19 has been a game changer for lamb in the United States as restaurant and food service shutdowns pushed more lamb cuts into retail outlets and opened up a wider audience to the product.

Australia easily has the largest market share of lamb and mutton exports to the US, currently trending at 76 per cent against New Zealand on 21 per cent.

The other nations that do ship into the United States are only minor players and in the latest data only account for 2 per cent of all sheepmeat sales to the US, meaning it is lamb and mutton supply from Australia and New Zealand which sets the tone of the market.

And while the UK is expected to have better access under its new trade deal with the United States, most analysts believe their impact on the market will be limited.

Looking ahead, Mr Steiner said the first trading months of the New Year were usually among the biggest for Australian lamb to the United States to meet Easter demands.

This year Easter falls in mid April, but taking into account shipping requirements, exporters are filling most of the Easter orders in January and February.

Mr Steiner said market dynamics were lining up favourably for strong sales to the United States in the New Year.

“Seasonally we see the biggest import volume come to the United States in the first three months of the year in order to support Easter demand,’’ Mr Steiner said.

“Ample lamb supply in Australia, a slowdown in Chinese demand, a strong US dollar and high prices in the US market should all contribute to very strong growth in Australian lamb sales.’’

But to what extent this will play out in the saleyard system is unclear, as many exporters appear to have locked into forward price deals to cover a big percentage of their kill needs.