Lamb and sheep slaughter almost always declines at this time of year. The changeover period between old and new season lambs has processors slowing down for maintenance and this year is no different. Despite this, year-to-date slaughter is significantly higher, which begs the question as to where these lambs are coming from.
Lamb
slaughter has been in relatively consistent decline since hitting a peak back
in mid-May. With old season lamb supply
falling away, and the suckers beginning a slow climb, processors have had to
adjust their demand.
Figure 1
shows East Coast lamb slaughter hit a new non-public holiday six-month low in
the week ending the 9th of August.
The driver of the fall was South Australia, where lamb slaughter halved,
and sheep slaughter fell by 69%. The
limited number of processing facilities in SA means that a maintenance shutdown
at one will have that impact on slaughter.
NSW and
Victorian lamb slaughter is off the peaks of May but remains elevated relative
to the five-year average.
Looking at year-to-date
east coast slaughter, the Meat and Livestock Australia (MLA) weekly numbers
have 2024 running 18% higher than last year.
The raw numbers are 1.25 million head more lambs having headed to the
processor.
In WA lamb
slaughter had increased 14% year on year (Figure 2), with almost 200,000 head
more processed. The big jump in the most
recent slaughter numbers shows WA maintenance slowdowns are over, and suckers
are starting to flow.
MLA’s sheep
industry projections are due to be updated in the coming weeks, but it’s
interesting to compare what was forecast versus what has eventuated. In March MLA pegged 2024 slaughter at 26.1
million head.
If lamb
slaughter runs at similar levels to last year from now until the end of 2024,
we will finish with an almost 2 million head increase in lamb slaughter. MLA’s projection was based on the size of the
flock and producer intentions.
There is
little doubt that the season has shifted producer intentions, and that means
that perhaps the extra 2 million head of lambs slaughtered were initially
slated to join the adult flock as breeding ewes or merino wethers.
What does it mean?
Higher than expected lamb slaughter, leading to a flock decline, is no doubt positive for prices. Improvement in the season in dry parts of Victoria and southeastern NSW will likely see more ewe lambs held over the next year, which will support for prices.
In the West, the market will be looking for a new equilibrium in terms of sheep supply and demand, but a decline in the flock will eventually result in WA prices moving closer to their East Coast counterparts.
Key Points
- Maintenance shutdowns have seen lamb slaughter hit six-month lows recently.
- In contrast, WA lamb slaughter has ramped up in recent weeks.
- Increased lamb slaughter is likely due to processing lambs that were supposed to join the sheep flock.
Click on figure to expand
Click on figure to expand
Data sources: MLA, Mecardo
