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Wool and sheep prices to rise with flock size says ABARES

Sheep Central, March 1, 2016

Sheep Merino wether AuctionsPlusAUSTRALIAN sheep and wool prices are expected to continue to rise over the next three years, according to the latest ABARES forecasts.

And Australia’s sheep flock is expected to reach 77 million by 2020-21, the agricultural forecaster has predicted.

ABARES March quarter 2016 Agricultural Commodities report released today said Australia’s main wool price index, the AWEX Eastern Market Indicator, is forecast to rise to 1300c/kg clean by next year.

The rural commodity forecaster believes the Australian Eastern Market Indicator will rise 13 percent to around 1240c/kg clean in 2015-16 and by a further 5pc to 1300c/kg in 2016-17.

ABARES wool EMI Mar 1-16Wool prices this year will be supported by an assumed lower value of the Australian dollar and a forecast fall in wool production and the further lift in the EMI the following financial year will be supported by forecast moderate growth in export demand, ABARES said. Recovering economic activity in major consuming economies, including the Eurozone, is also expected to result in a modest increase in consumer demand for woollen garments and apparel.

“Over the medium term, the EMI is projected to remain at around 1300c/kg in 2018-19 (in 2015–16 dollars), before easing gradually towards 2020-21.

“The EMI is projected to average around 1212c/kg in 2020–21 (in 2015–16 dollars), reflecting an increase in wool production in Australia and other major producing countries and an assumed gradual appreciation of the Australian dollar.

Sheep prices forecast to rise 15pc by 2016-17

ABARES Sheep saleyard price Mar1-16ABARES has forecast sheep prices in the short term to increase by 5pc to 350c/kg this financial year and by a further 10pc to 385c/kg in 2016-17.

“This reflects an expected reduction in adult sheep turn-off and greater restocker demand as producers rebuild their flocks under the assumption of favourable seasonal conditions.

“Flock rebuilding is expected to drive higher sheep prices, particularly the price of breeding ewes,” ABARES said.

Over the medium term, saleyard prices are projected to increase further in 2017-18, before declining gradually, as sheep numbers increase and turn-off starts to rise again. In 2020-21 sheep prices are projected to average 354c/kg (in 2015-16 dollars), ABARES said.

Sheep flock predicted to hit 77 million by 2020-21

ABARES sheep flock Mar 1-16ABARES expected sheep numbers to increase slowly to around 77 million head by 2020-21.

Over the medium term, assuming average seasonal conditions, with producers looking to increase sheep numbers and an ongoing trend towards sheep meat production, the proportion of breeding ewes in the flock and lambing rates is expected to rise.

The number of wethers (non-breeding sheep kept for wool production) in the flock is forecast to rise slightly over the outlook period, reflecting higher wool prices.

ABARES said in the first half of 2015-16, saleyard turnoff, particularly of lambs, increased in regions adversely affected by seasonal conditions.

“However, significant rainfall in eastern Australia in late January and early February 2016 has led to increased restocker demand and, as a result, sheep numbers are forecast to increase slightly in 2015-16 to around 70 million head.

“If seasonal conditions are favourable in 2016-17, graziers are expected to continue to increase sheep numbers,” ABARES said.

However, forecast higher saleyard prices will encourage lamb and older sheep slaughter to meet strong demand, especially for export. By the end of 2016-17, sheep numbers are forecast to rise by 2pc to around 71.4 million.

Read the ABARES Agricultural Commodities March quarter 2016 report here.

Source: ABARES

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