Good season spurring on sheep flock rebuild following drought
Sheep producers have several more reasons to smile as new data reveals another reason to be optimistic on top of Victorian processing capacity receiving a much-needed boost in time for the spring flush.
THE rebuild of the nation’s sheep flock after years of drought is officially underway, the latest figures released by industry body Meat & Livestock Australia reveal this week.
The good news comes as Victorian lamb producers breathe a sigh of relief as processors returned to near-capacity after COVID-19 restrictions eases, ensuring buying appetite won’t be hampered by a lack of kill-space as the spring flush builds.
The market has responded too.
Prices have lifted at Bendigo this week, up by $10-$18 per head for trade lambs, as competition from all buying sectors — export, supermarket and domestic plus restockers — intensified at the key Victorian saleyard.
The Eastern States Trade Lamb Indicator closed Monday at 751c/kg.
The positive signs continue in the wool market too.
The Eastern Market Indicator clawed its way back above 1000c/kg to sit at 1036c/kg at the end of last week’s auctions.
The gain of 99 cents was the biggest weekly improvement for the indicator in 12 months.
According to MLA, the good seasonal conditions are spurring on the signs of a flock rebuild.
MLA’s latest sheep projections update shows annual lamb slaughter has been revised lower to 20.3 million head. But it cautioned that the short-term economic impacts and reduced food service activity could yet hinder lamb and mutton exports.
However, MLA’s market intelligence shows that long-term global demand for sheepmeat remained strong.
MLA analysts Penny Graham said while 2020 sheep and lamb slaughter were both expected to drop from 2019 levels, down 33 per cent to 6.3 million head and 6 per cent to 20.3 million head respectively, carcass weights would increase.
Ms Graham said sheep and lamb prices were not expected to return to early 2020 figures.
“Mutton prices however have held up well relative to lamb this year, due to the significant decline in supply as producers withhold ewes to rebuild,” she said.
“Looking ahead, sheep and lamb prices could remain historically high, underpinned by positive drivers of demand in key markets.
Thomas Elder Markets analyst Matt Dalgleish said his modelling showed trade lamb prices were not likely to go above 800c/kg in the coming three months, but they were also unlikely to dip below the low-600c/kg range.
“They could ease in spring from where they are now as the flush comes through in earnest but I don’t think they will go much below 650c/kg,” he said.
“However the Australian dollar is rising and working against us a bit.”
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