Rabobank senior animal proteins analyst Angus Gidley-Baird.

AUSTRALIA’s sheep meat and beef producers are set to enjoy strong prices into next year, supported by a growing global appetite for meat amid limited supply availability, according to Rabobank’s just-released Global Animal Protein Outlook 2019.

The bank’s November Australia Agribusiness Monthly report also said lamb prices were expected to stay well-above the five-year average given the lower supply.

After dropping to 682/kg in early October, the Eastern States Trade Lamb Indicator climbed to 788c/kg by the end of October following rain, before dipping again to 678/kg in early November. The ESTLI climbed to 700c/kg on November 14, but yesterday dropped top 695c/kg as the southern new season turn-off gathered momentum.

However, the productive capacity of Australia’s beef herd and sheep flock will be limited by the heavy culling of female cattle and sheep seen in 2018, with any upside dependent on improved seasonal conditions in the year ahead, Rabobank said today.

Sheep meat price upside for Australia

Rabobank said declining sheep meat and beef production in Australia and New Zealand will get some “price upside” from the overall restrained global animal production outlook. New Zealand – the world’s other major supplier of sheep meat – is set to have its lowest lamb kill on record in 2019.

“Good global prices will continue to support local (Australian) prices for finished lambs and cattle in 2019,” it said.

Rabobank senior animal proteins analyst Angus Gidley-Baird said strong global demand for sheep meat and limited supply availability will support strong prices through 2019.

“While further upside beyond record 2018 sheep meat prices will be limited, prices will remain firm, given strong demand in key global markets such as the Middle East, China and the US,” he said.

Lamb production in Australia will remain restricted in 2019, impacted by higher sheep sales seen in 2018 due to dry weather conditions, Mr Gidley-Baird said.

Poor season conditions affecting lamb delivery

Rabobank said poor season conditions have had an impact on the delivery of new season lambs, with slaughter volumes for September continuing to be behind 2017 volumes. September lamb slaughter (1.52 million) was down 19pc on 2017 and year-to-date lamb slaughter is up 3pc for the year. Sheep slaughter on the other hand remains ahead of 2017. Sheep slaughter in September (883,000) was up 21pc on 2017 and year-to-date slaughter is up 30pc.

Lamb exports (22,972 tonnes) for October were close to 2017 volumes, while mutton exports (20,406 tonnes) were up 20pc year-on-year, reflecting the higher slaughter numbers. The trend of declining lamb shipments to the US of the prior three-months was reversed in October, increasing by 2pc. With lamb prices coming down as the new season progresses, coupled with the normal demand increase in the US heading towards Christmas and Easter, volumes to the US should remain strong for the coming months, Rabobank said.

MLA said the delayed onset of the new season lamb crop largely explains the erratic shipment volumes across the last two months but, with solid numbers now hitting the market in Victoria, exports should remain elevated over November and December. Despite some recent rainfall, the ongoing dry conditions saw elevated sheep kills throughout October, keeping smallstock abattoirs busy while lambs and goats were hard to come by. While many regions are heading into summer with sub-optimal feed, as the lamb kill finds a second wind and the supply of cull ewes begins to dry up, October may mark the peak in mutton exports for the season, MLA said.

Animal protein production growth slowing

Rabobank’s flagship annual outlook for the animal proteins sector, ‘Growth Slows Down…As Doubt Gears Up’, forecasts a slowing in the pace of growth for meat production in most regions throughout the world next year – with uncertainty created by trade tensions, high feed prices and African swine fever contributing to the decline.

Global animal protein production (primarily beef, pork and poultry) is expected to expand by just over one million tonnes in 2019 – well below the five-year average growth rate – to some 500 million tonnes.

Production growth will slow across nearly all key regions, with China predicted to see a substantial production decline, driven by the impacts of African swine fever on its pork sector, the report said.

Brazil’s livestock production, however, is forecast to continue its strong growth trajectory, while the production outlook for North America is also relatively strong, the bank said.

Click here to see a graph of total global animal protein production up to 2019.

Click here to read the full Rabobank media release.