Pork shortfall triggers meat supply crisis

Mecardo chief market analyst, Robert Herrmann, told the Seymour Wool Marketing Group soaring pig meat prices would see Chinese consumers substitute with alternative protein sources, including Merino mutton.

Of the world's 800 million pig herd, 54pc were in China and up to 70pc of those pigs were to be slaughtered by the year's end.

"The game has dramatically changed," he said.

"This is going to be such a big impact on your product... we haven't fully felt it yet.

"That protein demand in China hasn't gone away but China's ability to supply it has.

"In the short-term, it is a shot in the arm for the red meat industry."

Demand for sheep meat continues to intensify with Australian mutton exports to China surging 42pc year-on-year to 68,893 tonnes, according to Meat & Livestock Australia.

Analysts predict lamb prices will continue to burst beyond last year's record highs to 810 cents a kilogram due to lower supplies nationally and strengthening export demand.

"We have pretty good beef prices, high lamb prices and extremely high mutton prices - this is all before we have restocking demand in Australia," Mr Herrmann said.

"That will come at some point.

"NSW won't be in a drought forever.

"Anyone with any sheep in the next two years will be thinking 'do I keep them or do I sell them'.

"If prices get to $300-400 a head for good breeding ewes, you will think about it."

With close to 70pc of sheepmeat exported, Mr Herrmann said robust international demand and a low Australian dollar is supporting Australian exports and, in turn, buoying saleyard prices.

"Export markets now have the capacity to absorb additional supply and not to collapse under the weight of high drought-induced turnoff," he said.

While exports in 2000 made up 35pc of Australia sheep turn-off, Mr Herrmann said that number had now exceeded 60pc.

But with the nation's flock at the lowest level in more than a century, it was a growing concern whether the country could reliably feed export markets.

"Whether you talk about lamb, mutton or wool, if you can't supply a market, you won't hold it," he said.

One of the positives of the growing China demand was that frozen meat is more highly regarded than fresh meat because of the rigorous chain of control.

This meant processors banked stock when the volumes were available to meet exports year-round, helping to absorb seasonal flushes.

The ongoing swing toward a dual-purpose Merino would help sustain Australia's overseas meat markets.

Seymour woolgrower and shearer John Bassett, who runs a 1000-head self-replacing, dual-purpose Merino ewe flock with son Cameron and wife Lisa, will this year join ewe lambs in response to the forecast higher saleyard prices.

"Are we in front of the game that we consider Merino meat?" he said.

"Breeding in the middle part of the last century was so focused on wool that there had been an opportunity missed to develop the Merino as a meat producing sheep."

Responding to an estimated 10-20 million tonne pork production deficit discussed during a recent trip to China, Seymour Wool Marketing Group chair Neil Harris, Costerfield, offloaded his wethers and kept older ewes.

"Now I am in a position to have record ewe numbers so if prices soar, I can sell but, if they don't, I will still have the biggest turnover of lambs than I have ever had to chase the meat market," he said.