Mecardo last looked at the sheep offtake in July. Since then seasonal conditions have remained favourable in most regions for sheep numbers to grow, so it is time to look again at the flow of sheep off farm to abattoirs and the implications for sheep numbers in the coming year.
The presence of a La Niña event is certainly extending the recovery from drought in northern NSW and southern Queensland, which began in early 2020. In July Mecardo looked at the sheep and lamb offtake, concluding that, spring rainfall allowing, the flock expansion begun in 2020 was continuing.
Figure 1 shows the adult sheep offtake from 2008 onwards, along with the flock size with the shaded areas flagging periods when the offtake favoured and expansion in the flock size. The sheep offtake (a rolling 12 month sum of adult sheep sent to abattoirs expressed as a proportion of the estimated flock size) has been stable around 8% of the flock through 2021. This is some 4% below the neutral level in terms of change in the flock size, implying a boost to sheep numbers in the order of 4% (annually). The flock continues to be well and truly in expansion mode.
In Figure 2 the lamb offtake is compared to the flock size. Since 2013 the lamb offtake has had a negative correlation to the flock size. When the lamb offtake lifts to 32-33% the flock size tends to fall. In 2021 the lamb offtake has stabilised around 29-30%, appreciably lower than in recent years. From this perspective it looks as if farmers are holding back 2% of lambs as a help to building sheep numbers. This assumption is subject to variation in weaning rates.
The final schematic combines the sheep offtake and the year on year change in the lamb offtake as a guide to whether the Australian flock is contracting or expanding. The combined sheep/lamb offtake has spent 2021 at 5-6%, levels flagging a strong build up in the flock size.
The MLA in the latest sheep industry projections, project an increase this season in the flock size of 3.8%. With the combined sheep/lamb offtake at 5-6% the increase in flock size is more likely to be 6%. The assumptions for sheep and lamb offtake given in the MLA projections have the sheep offtake at 8% and the lamb offtake stable at 30%, offtake levels which should underpin an increase in the flock size of more than 3.8%.
What does it mean?
The Australian sheep flock continues to expand which is good news all around, after the contractions of recent years. Will the increased numbers impact on price for wool and sheep meat? For wool the story is quite varied across breed and micron categories, but not greatly is probably the best summary. For sheep meat the story depends on sheep numbers in other countries rather than in Australia.
Key Points
- Sheep and lamb sales to abattoirs remain at levels indicative of a continued strong expansion in the Australian sheep flock.
- As noted in the previous article the unknown is the breed makeup of the expansion although merino ewes continue to make up three quarters of the mothers in the flock.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: ABS, ABARES, MLA, ICS
