The March Meat and Livestock Australia (MLA) Australian Sheep Industry Projections were released on Monday. The projections provide a view on where the sheep supply is at in terms of flock, and how that will impact supply going forward.
After a year of record slaughter levels for lamb, and 18 year highs for sheep, MLA have quite rightly forecast a relatively dramatic decline in the sheep flock. Interestingly, we still don’t have an official number from the Australian Bureau of Statistics (ABS) for the sheep flock for June 2023, let alone June 2024, so any projections for the flock are coming from estimates of the flock size.
Figure 1 shows MLA are forecasting a more dramatic decline in the flock from the estimated peak reached in 2024. Heavy sheep and lamb slaughter are expected to see the flock decline 2.7%, or 5.8 million head, to 73.2 million head.
A further, albeit much smaller, decline in the flock is expected in 2026, with MLA pegging the flock at just under 72 million head. Flock growth is forecast for 2027, with numbers bouncing back to 74 million head.
The rapid growth in the flock from 2020-2024 led to higher lamb slaughter, which was at record levels last year. Lamb slaughter is expected to be steady this year, as the hangover of lambs from the large 2024 flock bolster supply.
The smaller flock is expected to impact lambs supply in 2026, but figure 2 shows lambs slaughter is still forecast at over 25 million head. How are we producing similar numbers of lambs from fewer sheep? Increases in the ewe portion of the flock and a move towards meat sheep is expected to continue the trend of producing more slaughter lambs from a small flock.
What we will see from a smaller flock is lower sheep slaughter. Figure 3 shows MLA are forecasting sheep slaughter to decline 17% from the 18 year peaks seen in 2024. The heavy fall in sheep slaughter still only has numbers back at 2023 levels.
What does it mean?
Tighter supply is good for price support. Weaker supply of sheep should mean support for both sheep and lamb prices, but we would expect sheep to close the gap on lamb somewhat. If lamb supply remains similar to last year, as forecast, we wouldn’t expect dramatic price increases without improving demand.
Key Points
- MLA’s Sheep Industry Projections were released last week.
- The Projections forecast a smaller flock, and tighter sheep and lamb supply.
- Prices should find support on the back of weaker supply in 2025 and 2026.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: MLA, Mecardo, ABS, Nutrien
