BR&C and Nutrien agents selling lambs at Ouyen this month.

AUSTRALIAN lamb and sheep prices could remain historically high this year, but are not expected to return to the levels of early 2020, according to the latest industry projections.

In its Meat & Livestock Australia’s 2020 Sheep Industry Projections September update, annual lamb slaughter has been revised down to 20.3 million head this year and mutton production is expected to decline as flocks are rebuilt.

Lamb slaughter is not expected to lift until 2021 and then continue to grow above 22 million by 2022.

Although short-term economic impacts and reduced foodservice activity could hinder lamb and mutton exports, long-term fundamentals underpin favourable sheep meat demand globally, MLA said.

MLA market information analyst, Penny Graham, said with lamb supplies looking at a recovery and subdued demand likely to continue in the short-term, sheep and lamb prices are 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.

“Looking ahead, sheep and lamb prices could remain historically high, underpinned by positive drivers of demand in key markets,” she said.

“This includes an eventual recovery in foodservice demand locally and overseas, population growth, expanding Chinese imports, the ongoing protein deficiency as a result of African Swine Fever (ASF), stable demand for lamb from the US and limited competition in import markets.

“This could be offset in the short-term by weaker local and global economies, and a stronger Australian dollar, especially relative to the US dollar.”

Rainfall has spurred flock rebuild

MLA said despite demand uncertainties, sheep producers appear to have commenced flock rebuilding amid improved seasonal conditions, high-end productivity and record lamb prices.

Although forecast rainfall through winter did not come to fruition, steady and regular falls across all southern states have allowed rebuilding of the national flock to commence. Sheep and lamb supplies have already contracted, with lamb supply through winter lower than forecast.

Ms Graham said while 2020 sheep and lamb slaughter are both expected to drop from 2019 levels; mutton down 33 percent to 6.3 million head and lamb 6pc lower to 20.3 million head, carcase weights will increase.

“We anticipate a slight increase in lamb carcase weights for 2020, up 0.7kg/head on 2019 levels to average 24kg/head, and sheep carcase weights to increase to 24.89kg/head up 0.7kg/head from 2019.

“However, increasing weights will not be sufficient to offset the decline in slaughter, with lamb production in 2020 expected to decline 3% to 487,000 tonnes carcase weight (cwt) and sheep production to contract 31% to 157,000 cwt,” Ms Graham said.

“Though the impact of consecutive drought years has contracted the overall sheep and lamb supply, we do anticipate improved seasonal conditions in early 2020 will filter through the spring flush and establish a rebuilding period from 2021.

“Reports of increased lamb survival and marking rates through winter have increased confidence for a larger spring lamb crop this year, reflected by the numbers of new season lambs entering the market mid-August.”

MLA said global market implications of COVID-19 continue to impact Australia’s lamb and key export markets, causing a general decline in foodservice demand, particularly for lamb.

“Lamb exports in 2020 have been revised lower to reach 269,000 tonnes shipped weight, down 5pc on 2019 volumes, while mutton exports are expected to decline 32pc to 126,000 tonnes swt.

“Global market conditions remain rather unpredictable, particularly due to the impact of COVID-19 and its influence upon foodservice industries around the world,” Ms Graham said.

“As such, the flow of Australian sheep meat exports through the remainder of the year is expected to continue to fluctuate as markets move through different stages of their COVID-19 recovery.”

Click here to read MLA’s Sheep Industry Projections September 2020 update or visit the Prices & Markets section of MLA’s website here.

Source – MLA.