Short weeks and an altered scheduled means it’s been three weeks before we take a close look at Meat and Livestock Australia’s (MLA) Sheep Industry Projections. While there is plenty of forecasts of interest, the standout is the fact that despite record lamb prices, the flock is to remain in decline.
The change in the Australian sheep flock forecasts since the September release are stark. The March projections have stripped 7% off the September estimate of the June 30 2025 flock number. For 2026 the flock is forecast to be 9% lower than previously thought in September, and the 2027 estimate is 16% lower.
Figure 1 shows the National sheep flocks is expected to decline further into 2028, sitting in the doldrums at 64.5 million head. If this number sounds low, it’s because it is. If realised, in 2028 there will be the fewest sheep in Australia since 1904, at the tail end of the 8-year Federation drought (figure 2). Talk about burying the lead.
Lamb slaughter forecasts had to fall with the flock and fall they did (figure 3). Compared to the September projections, lamb slaughter is forecast to be 10% lower in 2026 and 9% lower in 2027. Lamb slaughter this year is set to be the lowest since 2022, with some small improvements in supply through to 2028.
How increasing lamb slaughter is achieved with a declining flock is through increased marking rates. The assumption is lower productivity ewes are disappearing and being partially replaced with higher productivity ewes. The merino wether might become an endangered species.
Sheep slaughter is forecast to fall, but not quite as far as it did during the previous rebuild years in 2011 and 2021 (figure 4). This goes some way to explain continued declines in the flock.
Somewhat offsetting lower supply is higher carcase weights, but tight sheep and lamb supply bodes well for prices. Demand remains strong in export markets, but processors are no doubt feeling a squeeze, and there is more than enough uncertainty in global markets to keep a lid on further price increases.
What does it mean?
The main takeout here is that if the season is good, and we see a flock rebuild, sheep and lamb supply will tighten even further. If price increases can be passed on to export markets, we are in for a further record value in the coming year. If not, the downside will remain limited.
Key Points
- MLA’s Sheep Flock Projections are forecasting further declines in the sheep flock.
- Structural changes are forecast to see increased lamb production despite a falling flock.
- Price upside is limited by processor capacity to pay, or pass on extreme prices.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: MLA, ABS, Mecardo
