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May 2017

Sheep

Lamb and mutton prices both had a blistering start to 2017. The national trade lamb indicator has averaged 14.5% higher in the first quarter of 2017 compared to the last quarter of 2016, more than double the 5 year average increase of 6.5%. Strong demand and anticipated low supply have been the drivers of prices trending higher. Supplies are expected to tighten further through winter, further supporting prices.

Rainfall for the first quarter of 2017 has been mixed across the country. Western Australia experienced some severe storms in February, contributing to above average rainfall. Eastern states were generally below average rainfall and slightly warmer. The outlook is for drier and warmer than average conditions to continue through to June. The Bureau predicts a 50% chance of El Nino to develop later in the year but most signs in the Pacific are still showing neutral conditions.

Lamb exports have started 2017 in a strong position with volume for January and March easing only 0.4% on the same time in 2016. In addition, the export price per tonne is 11.5% higher lifting the value of lamb exports to 16.9% above this time last year. Demand has been coming from major export markets, USA (+9%), China (+88%) and UAE (+6%). South Korea and the United Kingdom have also shown strong increases.

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Price

Prices for all categories of lambs are trending higher in the first quarter of 2017 compared to the last quarter of 2016. The strongest gains have been for heavy (+18%) and trade lambs (+16%). Slightly lower, yet still strong gains have been made for restocker and light lambs, both up 11%. Compared to the first quarter of 2016, restocker and light categories are up 158c (30%) and 115c (23%) respectively.

Mutton prices are 48% above this time last year, reflecting lower sheep availability.

The outlook for prices is positive with continued strong demand, particularly from exporters, combining with tighter sheep and lamb availability through winter. 

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Production

Lamb production has trended lower in the first two months of 2017, down 4% on the start of 2016. This came after good conditions in Spring provided an early finish for lambs and a lift in slaughter rates late in 2016. Exceptional prices to start 2017 appear to have brought extra lambs to saleyards with yardings trending 18.3% above 2016 and 14.6% above the five year average for January to March.

In addition to the national sheep flock being relatively low, lamb marking rates are believed to have been lower last year. Many of those lambs will have been turned off already with higher slaughter rates in late 2016 and increased yardings in saleyards early this year, making it likely that supplies will be tighter going into winter.

Mutton production started 2017 9% lower than 2016 as producers look to hold ewes.

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Trade & Demand