Positive outlook for Australian sheep producers in 2017

The New Year should see the Australian lamb and sheep market benefit from reduced supplies and positive demand from domestic consumers according to the Meat & Livestock Australia’s (MLA) 2017 Sheep Industry projections.

MLA’s Manager of Market Information Ben Thomas said lamb slaughter is projected to be 22 million head for 2017, down 2% from the estimated 2016 level.

“While this is a decline year-on-year, 22 million head is still in line with the long-term growth trend observed over the past decade,” Mr Thomas said.

“Breaking the annual processing down to a quarterly basis, it is anticipated that the June and September quarters will be when supplies are the tightest. Lamb availability in the March quarter on the other hand, is likely to benefit from carry-over stocks from the final months of 2016, when extremely wet weather delayed many lambs coming to market.”

Assuming average seasonal conditions and a return to normal lamb marking rates, the numbers of lambs processed are anticipated to increase to 23 million head by 2020.

Thomas said Australian lamb production for 2017 is projected to ease 2% to 492,000 tonnes carcase weight (cwt), and while this is a year-on-year decline, the volume is in the realms of record territory.

“The Australian domestic market is anticipated to remain the largest consumer and account for 48% of production, or 237,000 tonnes cwt, with many encouraging signs coming from the market,” he said.

“For instance, domestic per capita consumption has stabilised in recent years, while at the same time the weighted average retail price has been increasing.

“To put this in perspective, domestic lamb retail prices in 2016 averaged just 10 cents shy of the record high set in 2011, at $14.51/kg, and per capita consumption is 8% higher now than what it was then.”

On the export front, Australian lamb shipments are anticipated to ease 4% year-on-year in 2017, to 220,000 tonnes shipped weight (swt).

“While this will be the third consecutive year of slightly lower exports, volumes are still in excess of 200,000 tonnes swt – a level breached for only the first time in 2013. The major markets are likely to again be the US, China and the Middle East,” Thomas said.

A recovery in lamb exports is forecast from 2018, with volumes expected to reach a record 235,000 tonnes swt by 2020.

“The longer-term export outlook should be underpinned by further growth in demand in Asia, especially China, the US and the Middle East, a lower Australian dollar, diminishing New Zealand exports, and Australia’s projected growth in production,” Mr Thomas said.

“Uncertainty surrounds the impact of Brexit on access to both the UK and EU. If negotiations result in expansion of Australia’s meagre sheepmeat access to these markets, it could provide a significant lift to exports and prices.”

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