Lamb and mutton slaughter levels revised

MLA reported carcase weights holding up well for the first three months of the year, remaining firm on year-ago levels at 23.1 kilograms.
MLA reported carcase weights holding up well for the first three months of the year, remaining firm on year-ago levels at 23.1 kilograms.

The enduring dry spell that has continued across most of Australia in 2018 has prompted sheep producers to either supplementary feed or de-stock.

According to Meat and Livestocks Australia’s May industry projections, national lamb slaughter for the year has been revised higher, now forecast to reach 22.85 million, up two per cent year-on-year, while sheep slaughter is expected to reach 7.8 million, up four per cent. 

Looking forward, winter rainfall will be pivotal when determining supply and prices for the remainder of the year as well as a successful winter lambing season. 

Parts of Victoria benefited from some decent falls in late autumn, while conditions across key growing regions elsewhere continue to deteriorate – particularly in NSW and south west WA.

MLA reported carcase weights holding up well for the first three months of the year, remaining firm on year-ago levels at 23.1 kilograms. Sheep carcase weights however tracked below 2017 levels with the national average two per cent lower than last year at 23.6kg. 

Mecardo market analyst Matt Dalgleish, said despite strong wool and sheep meat markets providing incentive for producers to retain stock, because of the absence of an autumn break, in the last three months there has been a significant increase in light lamb yardings across NSW.

“For the first three months of the year the carcase weights coming out of NSW and Victoria were quite a lot higher than the seasonal average,” Mr Dalgleish said. 

“I think in the first part of the year producers were trying to hold on to stock to see if they could get an autumn break and then move them across to pasture. 

“They were most probably implementing supplementary feeding which in turn produces a quicker weight gain than if you were feeding your stock on pasture.” 

But he said as the dry continued, the price of feed increased and the availability decreased. 

“Those people that had been trying to hold on to their stock have now finally bitten the bullet and realised they wouldn’t be able to feed any further,” he said.

“They have sold off surplus lambs and we have seen an increase in light lambs coming forward in NSW.”

Due to slaughter numbers being revised higher, production volumes for the year have also been adjusted up.

Lamb production is forecast to reach 524,000 tonnes carcass weight, up three per cent year-on-year, while mutton production is expected to lift two per cent, to 192,000 tonnes.

IMPACT OF DROUGHT ON SHEEP NUMBERS 

The flow on effect of increased slaughter rates across the country will see the national flock rebuild put essentially ‘on hold’ with numbers forecast to remain stable at around 72 million. 

According to Mr Dalgleish, with the weather forecast for the next three months dry everywhere in the south east, any chance of rebuilding stock numbers is shrinking. 

“From a longer-term perspective, I don’t think we are going into a massive de-stocking stage, but the intention to rebuild the flock has dissipated quite a bit,” he said.  

“Right now, in terms of stock numbers, we are in a holding pattern.”

He said the off take of sheep in terms of slaughter and live export out of the country, compared to the overall size of the flock are sitting around 12 per cent. 

“When the off take is below 12pc it is indicative that people are rebuilding the flock and when it goes above 12pc, then it shows that they are going through a de-stocking stage,” Mr Dalgleish said.

“Right now we are on the borderline. Producers aren’t looking to rebuild, but they are not de-stocking just yet.” 

But when we head into de-stocking territory it prolongs the rebuild of the flock, he said. 

“That means in the long run we are going to continue to have relatively higher sheep and lamb prices just because the longer it takes for them to rebuild the flock, the longer it is going to be able to take for increased production to occur,” he said. 

Sheep industry mogul Roger Fletcher said this is not the first drought we have seen and it won’t be the last.

“We have gotten through it before and we will get through it again,” Mr Fletcher said.

“The ugly bit about it is I’ve never seen it where the future looks so good for the industry and yet the the drought says, “but you can’t pick the cherries off the tree.”

“There will be a setback in numbers, but what we have to do is fight through it because there is hope out the other side.”

He said farmers now days have got all sorts of manoeuvres they can play to help them fight through the drought.

"We have better transport, better water systems, stock feeds and nutrition,” he said.

“Part of running your business is to create the different opportunities that are presented to farmers.

“With more markets across the world we have so many opportunities.

"With better transport and a wider diversity around the world - that helps us get through the drought.

“The sheep meat and wool industry is, in export, nearly as valuable as the beef industry today."

STRONG INTERNATIONAL DEMAND HELPING HOLD PRICES 

Despite increased slaughter, the Eastern States Trade Lamb Indicator (ESTLI) remains above the five-year average, albeit below the levels seen at the beginning of the year. 

The Eastern States Trade Lamb Indicator averaged 613c/kg for the year-to-April, back four per cent on year-ago levels but up 17 per cent on the five-year average for the period.

Sheep and lamb exports are also expected to increase due to the increased slaughter, with lamb exports forecast to surpass last year’s record-breaking year and mutton a three-year high.

For the first four months of this year, Australian sheepmeat exports grew 11 per cent year-on-year.

Lamb exports were up nine per cent for the year-to-April, while mutton exports were up 14 per cent.

Export growth is being driven by Asia, particularly China however much still depends on the level of Australia’s supply over winter/spring, the Australian dollar remaining competitive and Chinas domestic sheepmeat production.