Trouble reading this
report, click to
reverse
colour scheme
Gwendolen Rees and Thomas Jackson
Throughout 2008-09, lamb supplies have been tight and demand has remained strong. As a result, prices during 2008-09 approached historical highs in both nominal and real terms. In 2009-10, lamb production is forecast to increase slightly and, as a result, the Australian weighted average price of lambs is expected to fall slightly by 1.7 per cent to 415 cents a kilogram. This compares with an estimated average of 422 cents a kilogram in 2008-09.
In May 2009, the Australian Bureau of Statistics released its final estimate of the size of the Australian sheep flock as of 30 June 2008, which was revised down from an earlier estimate of 79.2 million head to 76.9 million head. As a result, the forecast size of the Australian sheep flock as at 30 June 2009 and 30 June 2010 has also been revised downwards from the March quarter 2009 estimates. The size of the Australian sheep flock is now forecast to be 73.2 million head and 69.9 million head by the end of 2008-09 and 2009-10, respectively.
The weighted average saleyard price of sheep is forecast to increase by 2.6 per cent in 2009-10, to average 200 cents a kilogram. This forecast increase mainly reflects continued strong demand for mutton and live sheep in export markets, combined with expected lower production of mutton. Mutton production is expected to decline in the short term as a result of the shrinking national flock and the retention of breeding animals in response to high lamb prices.
The price forecasts for lamb and sheep are dependent on a sustained improvement in seasonal conditions throughout 2009-10. Recent rains have increased re-stocker demand for lambs and sheep, which has contributed to higher prices. If seasonal conditions deteriorate, producers will turn off more animals and that will put downward pressure on saleyard prices.
Lamb prices have been consistently strong throughout 2008-09 and the profitability of producing lamb relative to wool has continued to increase. These high prices are expected to provide continued incentive for farmers to produce more lambs in 2009-10 by increasing the proportion of breeding ewes in flocks and joining a greater proportion of ewes to meat-breed rams. In 2008-09, lamb slaughter is estimated to fall by 2 per cent to 20.5 million head.
The higher proportion of ewes joined to terminal sires in 2008-09 is expected to result in an increase in lambs marked in 2009-10, as lambing rates are typically higher with meat-breed rams. This is expected to increase the availability of lambs for slaughter in 2009-10. Lamb slaughter is forecast to increase to 20.6 million head in 2009-10.
The average slaughter weight of lambs is expected to increase by 1.5 per cent in 2009-10 compared with 2008-09. This reflects the forecast increase in the proportion of crossbred lambs slaughtered relative to merino lambs and lower feed costs, as well as an assumed improvement in seasonal conditions. As a result of increased lamb slaughter and heavier slaughter weights, lamb production is expected to increase by 2 per cent in 2009-10, to 422 000 tonnes.
In contrast, sheep slaughter is expected to fall by around 5 per cent in 2009-10, to around 11 million head. This decline primarily reflects the lower overall number of sheep in the Australian flock, as well as the recent trend to retain breeding animals for sheep meat production.
Over the past two years, the proportion of sheep slaughtered has been around 25 per cent higher than the average between 2002-03 and 2006-07. This reflects continued poor seasonal conditions and the ongoing shift from sheep meat and wool production into cropping to benefit from relatively high grain prices. In particular, relatively low returns to wool production have contributed to the higher sheep slaughter rate, as producers turned off non-breeding adult sheep. In 2009-10, the sheep slaughter rate is expected to decline slightly in response to relatively favourable lamb prices and an assumed improvement in seasonal conditions.
Mutton production is forecast to fall by around 3 per cent in 2009-10, to 235 000 tonnes. This decline is smaller than the fall in sheep slaughter, reflecting higher expected average slaughter weights as a result of assumed greater pasture availability.
The volume of lamb exports from July 2008 to April 2009 fell relative to the same period in 2007-08. This decline is expected to continue to the end of 2008-09, given the decline in lamb production. Lamb exports in 2008-09 are estimated to total 151 000 tonnes, a decline of 7 per cent from the previous year.
Between July and September 2008, the high value of the Australian dollar relative to the US dollar had a negative effect on export volumes of sheep meat. However, the subsequent depreciation of the Australian dollar between October and December 2008 supported the increase in sheep meat export volumes in the same period.
In 2009-10, lamb exports are forecast to increase by around 5 per cent to 158 000 tonnes, reflecting the expected increase in lamb production. Growth in world demand for Australian lamb in 2009-10 is expected to be weaker than in the past few years because of the effects of the economic slowdown in some export markets. Lamb exports to the United States are forecast to increase by around 3 per cent to 38 000 tonnes in 2009-10.
As a result of lower sheep slaughter, mutton exports in 2008-09 are estimated to fall by 7 per cent, to 147 000 tonnes. Although exports to Malaysia for the 2008-09 year to date have nearly doubled year on year, export volumes to key markets such as the Middle East and the United States are estimated to fall in 2008-09 by around 15 per cent. In 2009-10, mutton exports are forecast to fall by a further 3 per cent to 143 000 tonnes, reflecting lower domestic mutton production.
Despite a 10 per cent decline in the Australian adult sheep flock during 2008-09, live sheep exports in 2008-09 are estimated to fall by 2 per cent to around 4 million head. The relatively small decline in live sheep exports reflects a significant increase in live sheep export prices. Between July 2008 and March 2009, live sheep export prices averaged around 20 per cent higher than the same period in 2007-08. The value of live exports in 2008-09 is estimated to increase by 17 per cent relative to 2007-08, to $334 million.
In 2009-10, live sheep exports are expected to remain at a similar level relative to 2008-09. Strong export demand for live sheep, particularly from the Middle East, is expected to support live sheep exports. The value of live sheep exports in 2009-10 is forecast to be around $336 million.
| Sheep meat outlook | ||||||||
2007-08 |
2008-09 |
s |
2009-10 |
f |
% change |
|||
|
||||||||
| Slaughterings | ||||||||
| Sheep | ’000 |
11 929 |
11 650 |
11 050 |
– 5.2 |
|||
| Lamb | ’000 |
20 899 |
20 500 |
20 600 |
0.5 |
|||
|
||||||||
| Production | ||||||||
| Mutton | kt |
258 |
242 |
235 |
– 2.9 |
|||
| Lamb | kt |
435 |
414 |
422 |
1.9 |
|||
|
||||||||
| Exports (shipped weight) | ||||||||
| Mutton | kt |
158 |
147 |
143 |
– 2.7 |
|||
| Lamb | kt |
163 |
151 |
158 |
4.6 |
|||
| – to United States | kt |
42 |
37 |
38 |
2.7 |
|||
|
||||||||
| Total sheep meat | ||||||||
| – value | $m |
1 246 |
1 370 |
1 325 |
– 3.3 |
|||
| Live sheep | ’000 |
4 069 |
4 000 |
4 000 |
0.0 |
|||
|
||||||||
| Saleyard prices | ||||||||
| Mutton | Ac/kg |
159 |
195 |
200 |
2.6 |
|||
| Lamb | Ac/kg |
335 |
422 |
415 |
– 1.7 |
|||