Forecast is strong

By Country News on April 18, 2017
  • Forecast is strong

    MLA market information services manager Ben Thomas said the sheep and lamb market was being influenced by a combination of factors.

Australia’s sheep and lamb markets are predicted to strengthen further with near record prices as production and slaughter forecasts are revised lower for 2017, according to Meat & Livestock Australia’s quarterly update of its 2017 Australian Sheep Industry Projections.

MLA market information services manager Ben Thomas said the market was being influenced by a combination of factors, including extremely strong producer intent to retain ewes for flock rebuilding, the current strength of the wool market and low grain prices.

‘‘Lamb slaughter is expected to contract further this year, revised down a further 500000 head from original predictions to 21.5million head for 2017 and down 1.5million head, or seven per cent, on the 2016 record,’’ Mr Thomas said.

‘‘In terms of availability throughout the year, on the ground reports suggest a reasonably strong supply through to the end of April, before numbers will become tight until the new spring flush.

‘‘Lamb production is expected to fall six per cent year-on-year in 2017 to 481600 tonnes carcase weight (cwt), before rebounding back above the 500000 tonnes mark in 2019.

‘‘Similar to lamb slaughter, mutton processing is also expected to contract further year-on-year, with a 1.2million head, or 17 per cent, year-on-year drop to 5.8million head for 2017.’’

Mr Thomas said with 2.7million less sheep and lambs set to be processed year-on year, the short supply would keep prices buoyant for the remainder of the year.

‘‘The current combination of factors in the market will lead prices to average alongside, or even exceed, the previous records,’’ he said.

‘‘Despite the buoyant market, there is a concern around the sustainability of the current price levels further up the supply chain, with some recent temporary closures of processing facilities.

‘‘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.’’

Mr Thomas said producers could be cautiously optimistic about prices beyond 2017, which will largely be determined by the rate of flock recovery and the extent to which processing capacity reduces.

■To read the April quarterly update of MLA’s 2017 Sheep Industry Projections visit: https://www.mla.com.au/prices-markets/Trends-analysis/sheep-projections/

■To read more or to subscribe to regular market information, visit: https://www.mla.com.au/prices-markets/

By Country News on April 18, 2017

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