National sheep and lamb production to drop as farmers look to restock

National sheep and lamb production to drop as farmers look to restock

Despite demand uncertainties, sheep producers appear to have commenced flock rebuilding amid improved seasonal conditions, high-end productivity and record lamb prices, according to Meat & Livestock Australia’s 2020 Sheep Industry Projections September update.

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.

MLA market information analyst Penny Graham said while the 2020 sheep (down 33 per cent to 6.3 million head) and lamb (down six per cent 20.3 million head) slaughter were both expected to drop from 2019 levels, carcase weights would increase.

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

“However, increasing weights will not be sufficient to offset the decline in slaughter, with lamb production in 2020 expected to decline three per cent to 487,000 tonnes carcase weight and sheep production to contract 31 per cent to 157,000 carcase weight.

“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.”

Ms Graham said reports of increased lamb survival and marking rates through winter had increased confidence for a larger spring lamb crop this year, which was reflected by the numbers of new-season lambs entering the market mid-August.

“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 five per cent on 2019 volumes, while mutton exports are expected to decline 32 per cent to 126,000 tonnes shipped weight.”

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

“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.”

Ms Graham said with lamb supplies looking at a recovery and subdued demand likely to continue in the short term, sheep and lamb prices were 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,” she said.

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

“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, 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.”

To read MLA’s Sheep Industry Projections September update, visit: https://www.mla.com.au/globalassets/mla-corporate/prices–markets/documents/trends–analysis/sheep-projections/mla-september-australian-sheep-industry-projections-2020.pdf

Original article credit www.countrynews.com.au