Prime & Store Sheep Reports

Sheep and lamb producers more confident on prices in 2024

Terry Sim, November 27, 2023

SHEEP and lamb producers are expecting meat and wool prices to improve in the 12 months, according to the latest producer sentiment survey by Meat & Livestock Australia and Australian Wool Innovation.

MLA’s National Livestock Reporting Service operations manager Ripley Atkinson said the survey of 1700 producers showed that there was a 109 percentage point drop reduction in confidence among sheep meat producers, and a 27pc decline among wool growers, in the past 12 months.

However, when asked how producers felt about input costs, lamb and wool prices for the next 12 months, they are expecting prices to improve.

“Producers believe that things are going to get better,” Mr Atkinson said.

See the latest sheep and wool producer intention survey results here.

Mr Atkinson said the key factors in the current sheep and lamb market are unseasonably high supply, prices below 10-year averages, mixed quality softening demand, lamb production above the record 2022 level, record lamb exports and resilient domestic demand.

He said the sheep flock is at 78.75 million head – the highest since 2007 – and the highest since the Reserve Price Scheme for wool.

“The breeding ewe numbers in April across the country were at their highest level since 2007 and lamb numbers this October will be the highest they’ve been since 2005.

“Since 2020, the flock has grown from 64 million a 100-year low to a 15–year high within the space of three years.”

Mr Atkinson said the sheep and lamb market has fallen further and faster than anyone expected.

Mr Atkinson said in the face of intense media scrutiny on El Nino predictions that generally haven’t eventuated, producers began offloading stock that probably shouldn’t have been sold because they weren’t finished or at the right weight and quality to market.

“And that mixed quality in face of higher supply is giving buyers the choice and the opportunity to determine or dictate what they pick out of those sales.

“And because of that that’s reducing demand across the general market.”

Mr Atkinson said Australia will have record lamb production and slaughter this year, and a high mutton kill, and these will also be higher in 2024. He said domestic consumption for lambs is the strongest it has been since 2016 “at an aggregated level not per capita”, increasing with the fall in saleyard lamb prices. Lamb exports have broken monthly records almost every month this year, he said.

Prices are lower than they were in 2019, but our seasonal conditions are not as bad, and the difference was the lower confidence among producers to buy, reducing demand and competition between buyers, he said.

“That’s why we are seeing the market where it is at.”

Mr Atkinson said in the last four week lambs prices have lifted considerably, driven by a lift in confidence and improving seasonal conditions, but high new season lamb supply is expected to keep pressure on prices.

“We’re expecting prices to lift, but we’ve got a way to go before we get above 10-year averages.

“So there is more upside than downside, but it will take some time.”

Mr Atkinson said he expected that slaughter lamb prices might increase toward mid-2024 when supply volumes go down in line with the breeding season.

“I think it is going to take time definitely and the reason being when you consider how significant supply has been and it is going to continue.

“The other side to that is the increase in export of bag lambs to the Middle East,” he said.

“Those lambs typically would have gone back to the paddock are now being bought processors Middle East customers.”

He agreed that this meant that the shortage of quality trade and heavy lambs might potentially happen sooner than mid-2024.

“I just think that the significant supply will limit the upside.”

 

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