The poor conditions that marred 2018 will have a significant impact on sheepmeat supply in 2019, with lamb slaughter forecast to be its lowest since 2012. Dry conditions, which have led to substantial drops in marking rates and the extensive culling of ewes and ewe lambs, underpins the forecast for a 7% decline in lamb slaughter in 2019, at 21.2 million head.
In the year ahead, many producers will be hoping for some consistent rainfall to help alleviate the pressures associated with high feed costs. Unfortunately, the current Bureau of Meteorology (BOM) three-month outlook does not point to a considerable turnaround in seasonal conditions. Considering the substantial moisture deficiencies apparent in many regions, particularly NSW, any improvement in conditions would require consistent ‘above-average’ rainfall over the coming months. As a result, sheep slaughter is forecast to remain near long-term averages at 8 million head, but back from the large numbers processed in 2018.
Both sheep and lamb carcase weights were impacted by the tough conditions and high cost of feed in 2018. This is expected to continue in 2019 with feedstocks depleted and feed demand to remain high until conditions improve. A fall in slaughter and carcase weights drives the 7% forecast decline in lamb production for 2019 to 475,000 tonnes carcase weight (cwt). Mutton production will likely see a steeper drop of 16% to 188,000 tonnes cwt.
The national flock is estimated to have declined by over 4 million head, or 6.1%, by mid-2018 and is forecast to experience a further decline of 3.7% to mid-2019 as many producers are forced to continue destocking as they wait for a turnaround in the weather. Longer term, high prices across both sheepmeat and wool provide a strong incentive for producers to rebuild their heavily depleted breeding flocks once conditions allow.
Fortunately, robust international demand and a low Australian dollar will continue to support Australian exports and, in turn, domestic saleyard prices. Records were broken in 2018 as markets around the world competed strongly for Australia's high quality sheepmeat. The expectation for supply, and consequently exports, to decline in both Australia and New Zealand will likely see global competition for sheepmeat intensify in 2019. The conditions that drove strong prices for well-finished stock last year look likely to remain in place in 2019, particularly whilst conditions remain dry.
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