ONGOING international demand for Australia’s forecast flat to declining sheep meat production is expected to keep lamb and mutton prices strong this year.
According to Meat & Livestock Australia’s 2018 Sheep Industry Projections, Australian sheep meat producers will continue to rebuild the national flock in 2018, leading to a slight decline in sheep and lamb slaughter as retention increases.
MLA said if the Australian Bureau of Meteorology’s three-month rainfall outlook comes to fruition and the major sheep-producing regions receive a decent autumn break, the industry will be ideally placed for another strong year in 2018.
Lamb exports are anticipated to pull back slightly this year, although shipment volumes are forecast to build up to new highs in 2019 and beyond as production increases.
MLA’s market intelligence manager, Scott Tolmie, said while lamb and sheep slaughter are expected to drop slightly in 2018, to 22.5 million head and 7.2 million head, respectively, carcase weights will increase.
“We are forecasting a slight increase in lamb carcase weights in 2018 which will help offset lower slaughter, resulting in a stable outlook for production at 514,000 tonnes cwt.
“The story for mutton, however; is slightly different, with carcase weights expected to ease from the record highs of 2017,” Mr Tolmie said.
“This, combined with declining slaughter, suggests we will see a small reduction in mutton production to 177,000 tonnes cwt.”
Mr Tolmie said the 2018 outlook for the Australian sheep industry was positive, with the increase in production and lift in prices recorded in 2017 underpinning the market’s current strength.
“With flat to declining production forecast this year, combined with strong, ongoing international demand, lamb and mutton prices should continue to see strong support this year.
“Consumer demand for lamb has been strong, with exports hitting record highs in 2017 at 251,000 tonnes cwt as well as maintaining domestic consumption levels despite increases in average retail prices,” Mr Tolmie said.
“While lamb exports are expected to draw back slightly in 2018 to 244,000 tonnes swt, this is still 4pc above the five-year average.
“Mutton exports are also likely to reduce as a result of decreasing slaughter flowing through to a decline in production.”
Mr Tolmie said China, Malaysia and Saudi Arabia remain the major export markets for mutton, and together account for more than 40pc of Australian exports.
Sheep meat production to rise in 2019
Mr Tolmie said that although 2018 should see a slight drop in overall sheep meat production, it is forecast to rise again in 2019 as the national flock grows. Lamb carcase weights for the year are expected to average around 22.9kg, continuing the upward trajectory of the last 10 years.
“This continued growth in carcase weight reflects the long-term trends around dual-purpose breeding, improved genetics and livestock management within the Australian sheep flock, as well as the fact that several major processors are maintaining fairly wide grid ‘sweet spots’,” Mr Tolmie said.
“Producers have been encouraged to grow their lambs and sheep out to heavier weights to capitalise on these bigger returns.
“Overall, there is a definitive theme around flock rebuilding in 2018,” he said.
“This, combined with the extraordinary run in wool prices recently, has led to the expectation that many producers will continue to retain more of their replacement ewes and Merino wethers, expanding the national flock a further 2.5pc.”
Click here to read MLA’s 2018 Sheep Industry Projections or visit the MLA website: https://www.mla.com.au/prices-markets/Trends-analysis/sheep-projections/