New Zealand lamb production rise impacts Australian producers

World export markets are awash with lamb as the two biggest global sheep meat producers post record kill numbers. This is what it means for Aussie producers.

World export markets are awash with lamb as the two biggest global sheep meat producers continue to post record kill numbers.

Australia’s lamb slaughter hit a record last month at more than 510,000 in one week, while New Zealand’s January to April slaughter is 8 per cent higher at 10 million.

But New Zealand supply is expected to tail off as rain stems the flock of stock onto the market.

Meat and Livestock Australia’s global analyst Tim Jackson said there was an improved seasonal outlook in key sheep areas, especially on the North Island, and stock flow was expected to decrease.

“Increased slaughter and dry conditions have encouraged destocking, resulting in a reduction in the size of the flock,” Mr Jackson said.

“As both of these factors are beginning to reverse, it’s likely that NZ sheepmeat export volumes will begin to moderate over the next several months.”

Mr Jackson said the increase in slaughter has manifested as a sharply higher stock turn-off rate, which suggested the flock will continue to shrink in the future.

This year’s New Zealand slaughter was 14 per cent higher for lambs but sheep kills fell 19 per cent. This should translate to a smaller breeding flock even if lambing percentages increase due to better conditions, he said.

The implications for Australia could see an impact on price and Mr Jackson said while MLA did not make predictions, “all things being equal”, the smaller New Zealand turnoff should boost demand for Australian lamb.

But there was a caveat.

“There are so many other factors affecting the global market at the moment that it’s difficult to say what effect it will have though,” he said.

“Disruptions in shipping, slightly lower exports to China and below-trend consumer confidence all clearly had a negative effect on demand, while strength in the US market, slowing inflation, and lower domestic red meat production in our export markets all had a positive impact,” he said.

As the two biggest players in the global sheepmeat market, Mr Jackson said it was important to monitor production and turnoff across the Tasman.

“New Zealand is a key competitor for Australian red meat, and what’s happening in NZ impacts the global supply/demand balance,” he said.

“Given that, keeping an eye on what’s happening overseas can be useful for producers because it gives them a better idea of what demand for Australian product looks like, which can make it easier to understand trends in the market.”

Last year, China was the biggest market for NZ sheep meat with 56 per cent of exports, followed by the European Union with 14 per cent, the United Kingdom 8 per cent and the United States, 7 per cent.