Australian sheep slaughter forecasts rise as dry conditions continue

According to Meat & Livestock Australia (MLA) lamb prices have reached record highs as strong demand meets tightening supply.

Annual lamb slaughter is now projected to be 22.9 million (m) head for 2018, up 2% on 2017, while sheep slaughter is forecast to reach 9.3m head, up 23% on 2017 levels.

MLA’s market intelligence manager Scott Tolmie said it had been a year of extremes for the Australian lamb market, with prices soaring into uncharted territory as strong demand met tightening supply.

“Australian lamb prices have been rising strongly since April, breaking records as they smashed through the 700c and 800c/kg carcase weight marks for the first time,”​ Tolmie said.

“Poor seasonal conditions and high feed costs have led to a waning supply of finished lambs as the year has progressed. This, combined with strong international demand, has resulted in fierce competition for a diminishing supply and driven up prices across the board.”​

He said the dry conditions had driven increased lamb slaughters for the first half of the year, spiking in the second quarter of 2018 as conditions worsened. This peaked in June, with the highest month of lamb slaughter on record.

“With no indication of improved seasonal conditions in the short term, reports suggest there will be greater numbers of lightweight, unfinished new-season lambs coming onto the market this year, as many producers in drought-stricken NSW and northern Victoria face challenging feed conditions,”​ he said.

“The timing and quality of the new-season lamb crop will have a large impact on prices for the rest of 2018.”​

Tolmie said while strong lamb and mutton prices had been a motivating factor to maintain or build flock numbers, the lack of rain across much of Australia put a lot of pressure on producers to de-stock or purchase supplementary feed.

This has also placed downward pressure on carcase weights, with the national average lamb carcase weight for 2018 forecast to be 2% lower than 2017 and the average sheep carcase weight down 8%, at 23kg.

Tolmie said strong global demand for Australian sheepmeat, combined with the softer Australian dollar and constrained domestic supplies out of New Zealand, had supported record export volumes and values.

Lamb exports between January and August increased 12%, to a record 183,000 tonnes shipped weight (swt), while mutton shipments surged 25%, to 105,000 tonnes swt.