Dry conditions continue to persist in Victoria and South Australia, putting upward pressure on sheep slaughter numbers, while slaughter numbers remain high in Western Australia. With the latest ABS quarterly slaughter data updated, this article takes a look at offtake levels and the implied effects to flock numbers.
Mecardo last looked at the sheep and lamb offtake in November (see article here), with eastern and Western Australia treated separately. Sentiment for merino sheep continues to be bleak, suffering from dry conditions in the south-eastern regions in combination with low prices. Adult sheep sales to abattoirs historically vary according to changes in seasonal conditions, increasing during drier conditions and decreasing during wetter conditions. Mecardo looked at this relationship in April 2023. (see article here)
Since November, the eastern sheep offtake has continued to rise. Figure 1 shows the eastern sheep offtake, from 1980 through to this month, reaching 15.2%, which is slightly contractionary. Keep in mind the sheep offtake is a rolling 12-month total of sheep sent to abattoirs expressed as a proportion of the estimate flock size 12 months ago, so it smooths out monthly and seasonal extremes.
The eastern lamb offtake (shown in Figure 2) has also increased slightly to a high of 36.7%. Since 2017, this has been the effective upper limit to the lamb offtake. The caveat to this observation is the changing structure of the flock, which presumably will allow for a greater proportion of lambs to be sold as a proportion of the flock size. With this changing flock structure in mind, the next schematic combines the two offtakes.
Figure 3 combines the eastern sheep and lamb offtake, with the combined annual offtake overlaid, as well as the eastern flock size (interpolated to monthly data from annual estimates). The graph covers the past two decades. An assumption drawn from this data is that the neutral combined offtake for eastern Australia is around 45% (the flock can sell 45% of its size in 12 months of sheep and lambs while holding its size). Using that assumption, the current offtake of 52% implies the eastern flock will shrink by around 7% this season, to mid-2025. Note that this method tells us nothing about changes in the breed makeup of the flock.
Figure 4 repeats the format of Figure 3 for Western Australia, running from 1980 onwards. The longer timeframe is used in order to show how extraordinary the combined offtake of the past 18-24 months has been, for a flock which is still predominantly merino. For Western Australia, a combined offtake of 39% has been assumed to be the neutral level. By this methodology, the western flock shrank by 13% last season and is on track to shrink by 16% this season, to around 8.6 million sheep. This is slightly less than one quarter of the peak flock size reached in 1990.
What does it mean?
Seasonal conditions, along with commodity prices, tend to drive farmer sentiment. In eastern Australia, seasonal conditions are the major factor in farm sentiment, so until good rain falls in South Australia and Victoria, sentiment will remain poor. While this situation stands, it is hard to disentangle seasonal conditions from commodity prices from other factors, especially for merinos/wool sheep. In Western Australia, the flock has nearly completed a second consecutive season in which the flock has been substantially reduced. What happens in 2025-26 will depend greatly on the upcoming winter/spring rainfall.
Key Points
- Sheep and lamb sales to abattoirs indicate a “normal” response to dry conditions in the southern regions of eastern Australia, with a contraction in the flock size to mid-2025 of around 7%.
- In Western Australia, the flock still looks to be downsizing, with slaughter numbers pointing to the flock shrinking by 16% this season after shrinking by 13% last season.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: ABS, ABARES, MLA, ICS, Mecardo
