Sheep numbers under threat as mutton kill surges

Australia’s sheep numbers are shrinking as mutton slaughter surges. See what this dynamic means for markets.

The national sheep flock has to be shrinking as the mutton kill is now trending at percentage levels that make it impossible for numbers to be sustained.

The Weekly Times understands Meat and Livestock Australia will officially downgrade Australia’s estimated sheep flock next week when it releases its latest industry forecasts for 2025 and beyond.

The extremely high mutton slaughter has been in the headlines for months, and it is showing little signs of slowing down. The latest available data – for the week ending February 21 – had the sheep slaughter at 2,256,336 head or 71,000 more than the same time last year.

An indicator of the health of the sheep population is to compare the flock size against the mutton kill (plus what has been exported live), and convert it into a percentage.

Currently, the adult sheep leaving the flock is trending at a ratio of 31 per cent.

The table on this page shows all the flock data and turn-off and lambs and mutton for the past 24 years.

A turn-off ratio above 30 per cent hasn’t been evident since the early 2000s, and it has always coincided with a shrinking flock. For example, in the seasons 2007 and 2008 when the mutton turn-off ratio was 32 per cent, the flock went from 85.7 million down to 76.9 million head.

Auctioneers take the bids at Jerilderie.

The anticipation is the official Australian flock size could be lowered below 75 million head when MLA releases its latest industry calculations on Monday next week.

The extensive table of data on this page – put together by MLA senior market analyst Erin Luckey – is fascinating as it highlights the shift in sheep production over time.

The most remarkable change is the number of lambs now turned off from a smaller sheep flock as the industry has transitioned away from a wool base to be more meat-focused, with crossbred and composite ewes producing more lambs.

Go back to the year 2000 and Australia’s sheep flock of 118.5 million was turning off 18.5 million lambs. Today the much smaller flock of 79 million is turning off 26 million lambs per year.

The difference in lamb production also reflects today’s focus on quick turnover and the development of lot-feeding to sell stock at younger ages.

And that raises another interesting point when you delve into current price results for sheep and lambs, with quick turnover lambs much more in favour than longer-term breeding sheep.

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Last week on AuctionsPlus the average price paid by producers for crossbred store lambs was $137 per head – this is up $40 per head on year-ago levels.

Compare this to scanned-in-lamb Merino ewe prices. Last week on the box the average for SIL Merino ewes was $143 (or only $6 behind a store lamb). The price is $35 below the average of $178 paid for SIL Merinos in late February last year.

Agents have described the current market for breeding ewes as very tough, and some producers are reportedly holding onto young unjoined ewes in the hope the mutton market takes off amid little restocking interest. The average price for unjoined Merino ewes sold online last week was $116.

It is easy to mount an argument that a ewe guaranteed in lamb and offering some wool return appears very good value at not much more money than a store lamb.

Drought-like conditions in key sheep grazing areas like the Western District and South Australia, plus the fallout from the impending live export ban in WA which has producers quitting sheep in that state, are key factors behind the big sell-down of sheep in the last 12 months.

Poor wool returns, high production costs including shearing, and the lure of cropping is another reason for the negative sentiment around sheep.

For those committed to remaining in sheep and lambs, there should be concern about what is happening to flock numbers and makeup (less Merinos and more crossbreds) and what it could mean for the availability of breeding stock and price going forward.

In recent years producers in Victoria, NSW, and South Australia have been able to rely on Merino sheep trucked over from Western Australia to rebuild flocks.

This pool of supply will not be there in future years, according to agents like Russell McKay, Elders Katanning in WA.

A long-term agent in the West, he said the move away from sheep was extreme and he believes the WA sheep flock has suffered a severe cut.

“I’m still classing 35 to 40 Merino flocks but not one of them has maintained their numbers – they are all downsizing and that is happening everywhere,” he said. “There used to be about 11 million sheep in WA and I believe there will be less than 6 million by next year.”