Ag News

Strong demand to underpin Lamb and Mutton prices

  • By: "Prime" Ag News
  • Jan 30, 2018

Key points:
  * Strong international demand is expected to continue to support lamb and mutton prices.
  * While lamb exports are anticipated to pull back slightly this year, shipment volumes are forecast to build up to new highs in 2019 and beyond as production increases.
  * Australian sheepmeat producers continue to rebuild the national flock, leading to a slight decline in sheep and lamb slaughter as retention increases.

Stable lamb production and a slight decline in mutton production is forecast for 2018 as producers continue to expand their flocks, according to Meat & Livestock Australia’s 2018 Sheep Industry Projections.

MLA’s Market Intelligence Manager, Scott Tolmie, said that while lamb and sheep slaughter are both expected to drop slightly in 2018, to 22.5 million head and 7.2 million head, respectively, carcase weights will increase.

“We are forecasting a slight increase in lamb carcase weights in 2018 which will help offset lower slaughter, resulting in a stable outlook for production at 514,000 tonnes cwt,” Mr Tolmie said.

“The story for mutton however is slightly different, with carcase weights expected to ease from the record highs of 2017. This, combined with declining slaughter, suggests we will see a small reduction in mutton production to 177,000 tonnes cwt.”

Mr Tolmie said the 2018 outlook for the Australian sheep industry was positive, with the increase in production and lift in prices recorded in 2017 underpinning the market’s current strength.

“With flat to declining production forecast this year, combined with strong, ongoing international demand, lamb and mutton prices should continue to see strong support this year,” Mr Tolmie said.

“Consumer demand for lamb has been strong, with exports hitting record highs in 2017 at 251,000 tonnes cwt as well as maintaining domestic consumption levels despite increases in average retail prices.

“While lamb exports are expected to draw back slightly in 2018 to 244,000 tonnes swt, this is still 4% above the five-year average.

“Mutton exports are also likely to reduce as a result of decreasing slaughter flowing through to a decline in production. China, Malaysia and Saudi Arabia remain the major export markets for mutton, and together account for more than 40% of Australian exports."

Mr Tolmie said that although 2018 should see a slight drop in overall sheepmeat production, it is forecast to rise again in 2019 as the national flock grows. Lamb carcase weights for the year are expected to average around 22.9kg, continuing the upward trajectory of the last 10 years.

“This continued growth in carcase weight reflects the long-term trends around dual-purpose breeding, improved genetics and livestock management within the Australian sheep flock, as well as the fact that several major processors are maintaining fairly wide grid ‘sweet spots’,” Mr Tolmie said.

“Producers have been encouraged to grow their lambs and sheep out to heavier weights to capitalise on these bigger returns.

“Overall, there is a definitive theme around flock rebuilding in 2018. This, combined with the extraordinary run in wool prices recently, has led to the expectation that many producers will continue to retain more of their replacement ewes and Merino wethers, expanding the national flock a further 2.5%."

If the Australian Bureau of Meteorology’s three-month rainfall outlook comes to fruition and the major sheep-producing regions receive a decent autumn break, the industry will be ideally placed for another strong year in 2018.

MLA provides a range of market information services including daily red meat market news updates, regional saleyard reports, live export information and price indicators.