Cheap Australian sheepmeat is flooding wholesale markets in the United Kingdom, keeping prices soft.
The Chinese market has already been deflated by an abundance of cheap Australian sheepmeat, and in its latest market report Silver Fern Farms (SFF) says this is now happening on UK wholesale markets as exporters from across the Tasman take advantage of a recently completed free trade agreement.
“Demand from UK retailers continues to track well and is helping fill the void left by a challenging wholesale market.
“The UK wholesale market remains a tough space with plenty of cheap Australian product flooding in following the UK-Australia Free Trade Agreement.
“Pricing in this space is very soft currently, making it an unattractive option for most product lines,” the report says.
North American markets are also suffering from cheap Australia lamb.
“The one shining light has been, and continues to be, lamb French racks, with NZ’s smaller lambs yielding a product which is ideally suited for foodservice application.”
Global mutton markets remain stable with demand matching supply, although pricing has stagnated after some recent small lifts.
Australia is exporting record volumes of lamb.
Meat and Livestock Australia (MLA) data for the month of August shows 1045t of lamb were exported to the UK, a 174% increase on a year earlier.
“While still relatively small, the substantial increase suggests that exporters are taking advantage of opportunities presented by the enactment of the Australia-UK Free Trade Agreement,” the MLA said.
Australia has exported 205,111t of lamb so far this year, a 10% increase on the same period in 2022, which was a record.
“The increase in exports suggests that Australia is set to break lamb export records again.”
Total exports for August reached a record 31,779t, a 21% increase on a year earlier, with most going to China, where volumes increased 47% year on year.
Exports to the United States for the month eased 10%, but it still remains Australia’s second largest market.
The report states that two-thirds of Australian sheepmeat exports occur between January and August, with 275,508t shipped to date.
MLA is forecasting total exports for the year of 462,000t but it says volumes processed are ahead of those projections.
SFF reports some price instability for beef in China and is not expecting a significant rally as in previous years as exports from Australia and South America flood the market.
Fears of an imminent El Niño climate phase are prompting an early Australian cattle kill, with exports 20% ahead of the same time last year.
SFF said demand for lean beef from the US has pushed prices there higher and chilled markets remain strong.