In this article Simon Quilty of Global Agri Trends unpacks the latest in global affairs and how it may affect supply of and demand for Australian sheepmeat.
To say these are turbulent times would be an understatement. War has broken out in the Middle East, tariffs imposed by America have gone up and down, China looks to impose safeguards on beef imports, and Australian sheepmeat works are considering closures.
In the last week, bombs fell all over the Middle East. All airfreights to the Middle East stopped, light lambs in Australia fell 25 ac/kg as exporters tried to grapple with a market closure.
The Middle East takes 19 per cent (pc) of Australia’s lamb exports and 27 pc of mutton exports. The lamb exports are dominated by light lamb carcase airfreight.
Mutton has a much higher dependency on the Middle East, accounting for 27 pc of all exports. Thankfully, mutton supply is falling fast, and strong global demand elsewhere will help place this product.
Tariffs remain a rollercoaster in America; the 10 pc tariff introduced at the start of 2025 was deemed illegal by the US Supreme Court for Australian lamb and other items. President Trump responded by threatening a 15 pc tariff on all imports (beef exempted), but in reality, this was not possible and is now set at 10 pc.
The shortage of both mutton and lamb is causing real angst for meat processors across Australia, with one western processor closing its doors indefinitely last week.
This chart shows Australia’s global sheepmeat exports in 2025. Source: Department of Agriculture, Fisheries and Forestry.
Yet, even with this said, the advice to lamb producers is to panic slowly.
Australia’s ability to diversify its meat markets is nothing new. We have done this for nearly 150 years. What is important to note is that there are options to minimise the impact of this chaos.
- Light lambs to become heavy lambs – the ability to put these light lambs on feed is there, and this week, as light lambs fell in price, heavy lambs increased in value. Many restockers saw this as a buy opportunity. A floor may develop quickly in the light lamb market.
- There is a genuine lack of supply as the flock rebuild looks to get underway. Given the extent of both the mutton and lamb kills over the last three years, tight supplies are expected, as the numbers simply are not there. This lack of supply once again relieves pressure on the market.
- Global markets (outside of the Middle East) remain firm. The US market this year has seen domestic lamb carcass values increase by 22 pc, and Australian imported lamb has risen on average by 18 pc over the last 12 months.
- Sheepmeat abattoir closures are an unfortunate reality, but not unexpected. After three years of heavy liquidation of the Australian flock, declining kill numbers are inevitable. This has occurred in previous livestock cycles and was last seen back in 2018 and 2019. This situation could last for the next three years.
Recent US monthly retail data highlights that Australian lamb is positioned as a high-end product in the US retail market. The fact that lamb retails in the US at $9.07 USD/lb, compared with beef at $7.33 USD/lb, pork at $3.30, and chicken at $3.13 USD/lb, speaks volumes about how lamb belongs at the elite end of the US market.
The ‘on again, off again’ approach with various market tariffs and trade restrictions makes it difficult, but I do not believe the overall fundamentals have changed – global demand remains strong, and protein is in short supply.
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