There are more sheep in the system than previously thought, with MLA revising their flock and slaughter figures higher on the June outlook. Total sheep and lamb numbers are now estimated to reach 70.6 million head in 2021, an increase of 10% compared to 2020. This is up considerably on the June projection of 68 million head. Above-average seasonal conditions and prices have sped the rebuild up considerably, and it is now expected flock numbers will reach 76.2 million head by 2023 – up 19% on last year’s 100-year low, and the highest figure since 2008.
Price predictions in last week’s projections indicate lamb returns have already peaked for the year, and are on their way down as supply increases. MLA aggregates a number of different industry analysts (including Mecardo) to forecast an average National Trade Lamb Indicator price for 2021, which has come out at 835¢/kg. This is 10% lower than where the NTLI currently sits (at 919¢/kg), and 2% lower than the current average price for the year of 852¢/kg. It is however 6% higher than the 2020 NTLI average of 807¢/kg, so it is unlikely any significant downwards plummet is on the horizon for the remainder of the year.
This predicted downward price pressure for the remainder of the year is seasonally typical, and furthered by MLA’s expectations of how many lambs there are still left to slaughter for the remainder of the year, with the spring flush coming later than it historically does. It is furthered by slaughter capacity concerns due to Covid-19 restrictions & closures. This all said, forward pricing contracts offered by processors are a good indication that lamb prices mightn’t have far to fall at all, with returns likely to remain above year-ago levels.
What does it mean?
Lamb slaughter is expected to lift 3% overall in 2021, and prices have so far remained at record levels, which shows us demand is buoyant. Lamb exports are likely to lift 6% this year, and up to 17% by 2023. Team this with the rapidly growing flock, and positive weather outlook (at least in the short term) and it’s all coming up roses for those in the sheep game.
- The Australian sheep flock is expected to grow by six million head this year, to more than 70 million.
- National Trade Lamb Indicator forecast to average 835¢/kg by the end of the year, 10% below its current rate.
- Lamb slaughter is predicted to be 600,000 head higher than the 20-year average, pending processing capacity.
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Data sources: MLA, Mecardo