Australian sheep market update – flock rebuilding

Wednesday, 7 October 2020

Meat and Livestock Australia has published its latest market projections for 2020 and beyond.

  • Lamb slaughter: 20.3 million head, 6% lower than in 2019
  • Sheep slaughter: 6.3 million head in 2020, 33% lower than in 2019
  • Lamb production: 487,000 tonnes cwt, 3% lower than in 2019
  • Lamb exports: 269,000 tonnes swt, 5% lower than in 2019

Steady and regular rainfall across all southern states was sufficient to allow producers to start rebuilding flocks in Australia. Sheep supply has already contracted, while lamb supply through winter was lower than forecast. The estimate for the national sheep flock as at 30 June 2020 has been revised up to 63.8 million head, a 3% decline year-on-year.

The main uncertainty in the lamb market is identified as being demand, with COVID-19 in Australia and key export markets causing a general decline in foodservice demand, in particular for lamb. With lamb supplies recovering and subdued demand likely to continue in the short-term, sheep and lamb prices are not expected to return to early 2020 record levels. However, prices could remain historically high, underpinned by positive drivers of demand in key markets, including:

  • Eventual recovery in foodservice demand locally and overseas
  • 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.

However, these could be offset in the short-term by weaker local and global economies.

The national flock has been in contraction for the past three years, but is expected to rebuild from 2021 for three years. In contrast to the raised slaughter in recent years, in 2020 processors have faced robust competition from those looking to restock. Producers are expected to retain larger numbers of ewe lambs from the spring crop, which will see fewer lambs enter the market in the coming months than in previous years.

Moving into next year, an anticipated recovery in overseas demand, continued robust domestic buying from famers looking to restock and limited supply availability should lend support to prices.

Duncan Wyatt

Lead Analyst - Red Meat

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