Lamb market benefits from stable slaughter trend

Meat & Livestock Australia’s (MLA) mid-year Australian Sheep Industry update has revealed that the national monthly lamb slaughter has been its most consistent over the last two and a half years – signalling a greater probability of more consistent market trends going forward.

MLA’s Manager of Market Information Ben Thomas said record lamb slaughter and production is forecast for 2016, with sheep production forecasts remaining unchanged since April.

Mr Thomas said one of the most interesting trends was the stability in the average number of lambs slaughtered and its contribution to prices.

“Since 2014, there has only been a 4 per cent change in the rolling 12-month average number of lambs slaughtered,” Mr Thomas said.

“This reduced volatility in supply has also helped reduce volatility in the average pricing in recent years, along with the softer Australian dollar and lower NZ lamb production.”

Mr Thomas said the higher numbers of lambs on hand and expected lamb sales are behind the slightly upward revision to the 2016 lamb slaughter projections.

“We are forecasting 2016 lamb slaughter to be at 23 million head – which will become the fourth consecutive year with a record number of lambs processed,” Mr Thomas said.

“This boost was assisted by a late autumn break, which continued through June, and brought widespread rain to most key lamb producing regions.

“If the outlook for a wetter than average July to September comes to fruition, it is likely to continue to assist the strong lamb and sheep markets.

“Looking forward, 2017 lamb slaughter is likely to remain below these levels as a direct result of fewer ewes joined – as indicated by the MLA and AWI June Wool and Sheepmeat survey.

“The expectations are that lamb slaughter will rise after 2017, with 2020 forecasts likely to reach 24 million head.

“Lamb production in 2016 is also expected to reach a high of 510,600 tonnes carcase weight – up 1 per cent – on the back of the small increase in lamb slaughter and average carcase weights matching 2015’s record of 22.2 kilograms per head.”

For sheep, the rolling 12-month total slaughter continues to trend lower, with mutton prices reflective of the progressively tightening supplies – with the forecast for 2016 to remain at 7.8 million head, a 9 per cent fall from 2015.

Mutton production forecasts for 2016 remain well below year-ago levels at 185,860 tonnes cwt and this is expected to dip again in 2017. Beyond 2017, production will begin to creep upwards as sheep slaughter increases.

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