LAMB processors are holding onto more export stock than ever, as the global financial downturn takes a bite out of top-end meat sales.
This is according to CRF Colac demand, supply and marketing general manager Malcolm Harvey.
Mr Harvey said several key lamb processors had high levels of stocks sitting in their chillers "which were not normally there".
He said the reason was that higher-priced products were not being sold as importers sought cheaper, manufacturing-grade products.
CRF, which deals mainly with Coles supermarkets, will this year enter the export market with its own lamb products to the US and Asia.
And while Mr Harvey said the current trading conditions were tough, he was confident CRF’s arrival on the global stage would be a success.
Last month, however, proved a bad one for lamb exports, with shipments falling 26 per cent on last year.
Meat and Livestock Australia attributed the fall to high saleyard prices and tight domestic supplies.
Shipments to the US - Australia’s No 1 lamb export destination - were particularly affected, dropping 28 per cent.
Shipments to the European Union fell 35 per cent, with exports to China down 30 per cent.
However, lamb exports to relatively-small Japanese market improved 39 per cent.
Domestically, lamb sales took a big hit in recent weeks, with the downturn in demand attributed to the hot weather.
Robbie Radford of Radfords Meat, Warragul, estimated the hot weather and bushfires had led to a 30 per cent drop in domestic lamb sales.
"Once it gets over the mid to high 30s (degrees), our sales drop, and there is a bit of a price war," he said.
"We are seeing that having an affect on the lamb market now.
"But I think lamb prices will improve."
Sheepmeat Council of Australia president Kate Joseph said the industry was going through a tough time but the market was holding up well for producers.
However, with the national sheep flock in decline, Ms Joseph said lamb supply remains the big challenge for the industry’s future.
"The industry is grappling with how to keep supply levels up (to processors)," she said.