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Low sheep supply to spark record Australian prices

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Oscar Rousseau

By Oscar Rousseau+

10-Apr-2017
Last updated on 10-Apr-2017 at 13:10 GMT2017-04-10T13:10:51Z

High prices for wool will help the sheep sector in 2017
High prices for wool will help the sheep sector in 2017

Tight livestock supplies will see Australia process 2.7 million fewer sheep and lambs this year, which may lead to record prices for the industry.

Australia’s mutton slaughter numbers are expected to be the second-lowest on record and lamb slaughter has also been revised down on the back of a tightening supply of sheep and lambs.

However, levy board Meat and Livestock Australia (MLA) said the sheep and lamb market prices could be the strongest on record because of the tight supply.

Ben Thomas, MLA’s manager of market information services, said the near 3 million drop in the number of sheep and lambs set for production this year “will keep prices buoyant for the remainder of 2017”.

‘Risk’ to producers

Thomas added that a combination of factors, including high wool prices and low grain costs, would see prices either average or exceed the previous record. MLA could not be reached to confirm when the previous record was.

Despite the positive price climate for producers, there is concern higher up the supply chain that these may be corrected in the future once the livestock head count recovers.

The risk for producers is once the number of sheep and lambs available for processing do recover, and if processing capacity remains reduced, there is the potential for a greater correction in prices than otherwise would have been the case,” said Thomas.

Any price changes will be largely affected by the rate of flock recovery and/or a reduction in processing capacity. Thomas added producers could be “cautiously optimistic” about prices post-2017.

Lamb production is expected to fall by 6% year-on-year in 2017, leading Australia to revise its lamb export targets downwards by 7% for the year.

The US, China and the Middle East will continue to be key export markets for Australia.

Mutton exports are expected to be down 18% on 2016 figures.

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