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According to the current release of the Australian sheep industry projections for 2016 by Meat and Livestock Australia (MLA), demand for Australian lamb continues to be strong in established markets, with potential to increase exports restricted by availability due to seasonal conditions and a breeding flock stabilised at 40 million ewes.

The national lamb slaughter is expected to decrease by 3.4 percent to 21.5 million head, while lamb production will record a decrease of 2.2 percent with 482,000 tonnes processed due to increase in average carcase weight.

Despite domestic per capita consumption steady at nine kilograms, MLA expects demand for Australian lamb during 2016 will continue to be heavily influenced by international customers.

The Australian dollar is forecast to drift below 70 US cents in 2016, and stay in that region for the duration of the year.

This factor, combined with the significantly lower New Zealand lamb production and export forecasts, will place Australian production in an extremely favourable position, and should ultimately assist Australian lamb prices at the farm gate.

Australian lamb exports in 2016 are forecast to reach 230,000 tonnes, down slightly from the estimated 2015 level and limited by supply.

The primary markets for Australian lamb in 2016 will again be the Middle East and the US, where a small year-on-year increase in export volumes is likely, while most other markets will either hold steady or see a small decline – due to the lower overall volumes available

The Middle East is a significant export market for lamb, and during 2016, Australia's lamb exports to the region are forecast to again increase, yet will be limited in extent by the projected decrease in total lamb supply.

The increase is expected due to continued consumer demand and population growth, a sharp decline in the availability of Australian mutton for export, some of which will be substituted by lamb, and lower New Zealand exports.

Australia's main markets for lamb in the Middle East are the UAE, Jordan, Qatar, Bahrain, Saudi Arabia and Kuwait.

