Country News

Lamb production down but strong international demand keeps prices high

By Rodney Woods

Strong international demand for Australian sheepmeat continues to underpin historically high lamb and mutton prices, buoying producers with stock available to sell, as most Australian producers continue to manage severe drought conditions.

The September update of Meat & Livestock Australia’s 2019 Sheep Industry Projections has seen forecast lamb exports revised slightly higher on previous projections to 268,000 tonnes shipped weight. National lamb slaughter has also been revised slightly higher and is now expected to reach 21.6 million head, a decline of five per cent on 2018. MLA senior market analyst Adam Cheetham said domestic sheep and lamb indicators had surged to new highs in 2019, as demand from overseas markets had outweighed domestic availability and more than offset the price pressure usually associated with a prolonged dry period. "There has been exceptionally strong demand from China and the United States in particular, supported by a depreciating Australian dollar,” Mr Cheetham said. “Prices across all categories reached record levels during winter.

“The national saleyard trade lamb indicator powered through 900¢/kg at the beginning of July and ultimately reached a peak of 950¢/kg, nine per cent above the high achieved in September 2018. “Once conditions improve, strong prices for both sheep and lambs are likely to see many producers begin to rebuild their flocks after a long period of destocking,'' Mr Cheetham said.

“Increased restocker activity will apply further competitive pressure to processors looking to fulfil export demand. “For large parts of the east coast, water shortages have reached a critical point. Producers in many regions face an increasingly difficult and expensive burden in sourcing water for livestock, with many opting not to join their ewes on hand or further destock. “Forecast lamb slaughter reflects reduced ewe numbers and generally poor marking rates.”

Mr Cheetham said 2019 lamb production was forecast to decline three per cent year-on-year to 495,000 tonnes carcase weight.“The decline in production is due to the considerable drop in lamb slaughter, but will be partially offset by increasing carcase weights,” he said. “The impact of deteriorating feed and stock water pressures cannot be understated.

“However, average lamb carcase weights have progressed in 2019, supported by the price of finished lambs." Mr Cheetham said the southern wet season had so far been very mixed, with parts of South Australia and south-west Victoria having an above average season, in stark contrast to the challenging conditions experienced in northern Victoria and the majority of NSW. “The significant variability has presented challenges in ascertaining how national lambing rates have performed, however the overwhelming consensus is for fewer lambs to enter the market for the remainder of 2019.”