Industry projections have been updated at Meat and Livestock Australia (MLA) due to unfavourable seasonal conditions and planned retention of female lambs for stock rebuilding.
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The MLA said despite a strong first half of the year, July saw the national trade lamb indicator lose 93 cents from where it started the month before.
It has since bounced back to 630 cent per kilogram in the middle of July before finishing the month averaging 580 cents per kilogram.
A dry winter across many key production areas and poor seasonal outlook to October will now create further uncertainty for the sheep and lamb market.
MLA’s Manager of Market Information Services, Ben Thomas said while prices were still strong the market would largely hinge on seasonal conditions and feed availability coming into spring, along with the extent to which processing capacity can absorb the predicted eventual recovery in supplies.
“Processor capacity has been reduced with temporary and permanent plant closures, due to limited supplies over the past year,” Mr Thomas said.
“This poses a risk for when lamb and sheep availability does begin to ramp up, particularly if seasonal conditions don't improve. If capacity does not increase with supply, this could put significant downward pressure on prices.”
Mr Thomas said results from the June 2017 MLA and AWI (Australian Wool Innovation) wool and sheepmeat survey indicated producers still had a strong intent to increase or maintain the size of their breeding ewe flock for the next 12 months, but were changing the way they’re undertaking the rebuild.
“This intent to retain more ewe lambs instead will restrict the supply for slaughter until their progeny come through,” Mr Thomas said.
“After five months of 2017, Australian lamb slaughter was at 9.2 million head – down 7 per cent from year-ago levels.
“There have been no revisions since the April update to the national lamb slaughter forecast for 2017, to reach 21.5 million head. While this is a 6 per cent decline year-on-year, processing levels are anticipated to increase in 2018 to 22 million head, and continue on the long-term growth trajectory.”
Mr Thomas said many of the revisions to the sheep projections were also influenced by heavier lamb and sheep carcase weights in 2017, which have flowed on to production and export volumes.
MLA provides a range of market information services including daily red meat market news updates, regional saleyard reports, live export information and price indicators.
To read more or to subscribe to regular market information, visit the Prices & Markets section of MLA’s website https://www.mla.com.au/prices-markets/