Australian sheep meat returns will remain strong for producers as the industry slowly ramps up its rebuilding phase after a long period of decline, according to a report by Farmonline.com.au.
Citing data from ABARES, the report said Australia’ national flock has reached its bottom at the lowest point since 1887 at 68 million head. A gradual rebuild will take place as producers chase the record returns on offer while slowly expanding their flock.
Average lamb prices in the saleyards are expected to reach 517 Australian cents a kilogram in 2011-12 as producers cut back their slaughter rates, while sheep will grow slightly to 390c/kg – a rise of about 3%.
However, while lamb prices are expected to remain high and even increase further into 2015-16, sheep prices will slip gradually as the nation’s flock expands.
The recent flooding in the eastern Australian states will underpin flock growth in the short term as producers try to maximise their returns from the increased feed on offer after years of drought.
Lamb production is also forecast to increase as the flock expands, in line with an increase in markings due to the rise in ewe numbers, as adult slaughter declines to facilitate this.
Domestic consumption for both lamb and mutton has decreased slightly in response to rising retail prices, and will remain relatively stable at this level.
Meanwhile, exports are expected to fall 3% and continue to drop in the short term as production rates drop. In the medium term, however, exports will recover at an average rate of 3% a year.
Global demand for sheepmeat is growing, particularly in developing countries, but also in the US and EU as their domestic production falls back.
However, an increase in competition from New Zealand will temper growth in major export destinations due to an increase in Kiwi sheepmeat exports as that nation also looks at rebuilding its flock.
Despite the fall in volume, lamb exporters can look forward to a 10% rise in earnings to a total of almost AUD $1 billion. Earnings for mutton exporters, while the market is much smaller, are expected to rise more than 20%.
Source: Farm Online