TL;DR: Demand for Australian lamb in the US has significantly increased, boosting prices. Despite general market softening, strong overseas demand supports robust pricing, positioning Australian lamb well in global markets for the foreseeable future.
Strong Uptake in the US
Since December, the American appetite for Australian lamb has surged impressively. Just before Christmas, prices for frozen lamb legs were around A$9.09 per kg wholesale. Since then, they’ve jumped a significant 61% to A$14.67 per kg.
Factors Influencing Prices
While local market dynamics typically sway prices on a weekly basis, long-term trends are more often shaped by sustained overseas demand. This is especially true when specific cuts of meat become popular in particular markets.
Price Dynamics and Market Influences
The relationship between the Heavy Lamb Indicator and the prices of US imported lamb legs showcases an intriguing dynamic. These indicators, while not perfectly aligned, do influence each other over the long term, with US prices generally guiding the heavy lamb segment.
Seasonal and Cyclical Changes
In December 2022, both US lamb imports and the Heavy Lamb Indicator began to decline, continuing through most of 2023. This was partly due to expected dry weather in Australia affecting local prices and a dip in consumer demand in the US impacting imports.
Recent Market Resurgence
However, by October 2023, Australian lamb prices began to recover, leading US import prices by about three months. This revival was fueled by beneficial rains on Australia’s east coast boosting local market confidence, while in the US, rising prices for other proteins since January 2024 have spurred further demand for lamb.
Current Market Trends
Since the start of the year, despite a general easing, the Heavy Lamb Indicator has decreased by 16%, showcasing better resilience compared to the Light Lamb Indicator, which dropped 34%. This relative strength in the heavy lamb market is largely supported by robust overseas demand.
Outlook for Australian Lamb
Given the strong connection between meat demand and livestock prices, the optimistic prospects for Australian red meat globally bode well for producers. With competitor supplies dwindling and consumer spending remaining strong in key markets, Australia is well-positioned to meet international demand in the upcoming months and beyond.
