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Insights January 2020

6 January 2020 |Sheep & lambs
Sheep

Insights January 2020

6 January 2020 |Sheep & lambs
The January update provides an analysis of production and pricing trends for Australian sheep producers.

Overview

  • Chinese demand for lamb and mutton is expected to be sustained throughout the coming year.
  • The benefit of high prices and strong export demand will be limited by reduced production, particularly if significant rain leads to restocking in autumn months.

Australian lamb and mutton production is expected to continue a downwards trend in 2020. Significant destocking in the past two years is expected to see a 3 per cent decline in lamb production, and up to 14 per cent decline in mutton
production in the next 12 months. Should significant rainfall develop, production would tighten further if producer confidence is restored enough to retain more lambs and begin restocking.

Chinese demand for alternative protein sources due to African Swine Fever continues to sustain demand for Australian lamb, and to a greater extent mutton. At one point in 2019, mutton prices were at the lowest discount to
the trade lamb indicator on record.

The Chinese pig population is likely to take at least another year to rebuild, which is expected to support both lamb and mutton demand in 2020, offsetting declining exports to Singapore, Taiwan and the United Arab Emirates.

Downward trending lamb prices in late 2019 reflected seasonal trends, however strong export demand and reduced supply are expected to see the Eastern States Trade Lamb Indicator (ESTLI) rebound up to 1,000 c/kg during the peak winter period. Similarly, mutton values declined slightly during the Christmas period, but are expected to remain above prices seen last year.

   

Sources: Meat & Livestock Australia

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