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Crops |
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Livestock |
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Energy |
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Metals |
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| Sheep meat | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas Jackson |
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| The Australian weighted average saleyard price of lambs is forecast to increase by 16 per cent in 2008-09, to an average of 390 cents a kilogram. This increase reflects high lamb prices in the first two quarters of 2008-09 and expected fewer slaughter lambs available for the remainder of the year. Between July and September 2008-09, average saleyard lamb prices were 423 cents a kilogram, the highest in real terms since 2004-05. While prices have since fallen as new season lambs have entered the market, they remain high relative to previous years. The Australian weighted average saleyard price of sheep is forecast to increase by 10 per cent to 175 cents a kilogram in 2008-09. Reduced domestic supply of sheep for slaughter and continued strong demand for mutton in export markets underpin this forecast. Late spring rainfall and falling feed prices have also stimulated restocker demand for sheep. The price forecasts for lambs and sheep are dependent on a sustained improvement in seasonal conditions throughout the remainder of 2008-09. If seasonal conditions are poor, particularly in autumn, turn-off of sheep and lambs will rise, putting downward pressure on prices. |
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| Production to fall as slaughter slows | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reflecting a fall in the number of lambs marked, lamb slaughter in the first quarter (July to September) of 2008-09 was down 10 per cent relative to the first quarter of 2007-08. Overall, lamb slaughter in 2008-09 is forecast to decline by 7 per cent to around 19.5 million head. This forecast primarily reflects the lower number of lambs marked in 2008-09. Lamb production is forecast to fall by 9 per cent to 398 000 tonnes in 2008-09, because of the reduction in lamb slaughter and lower average slaughter weights. From July to September 2008, average lamb slaughter weights were down 4 per cent year on year. This fall primarily reflects ongoing dry seasonal conditions and lower average minimum temperatures across a number of sheep producing regions, which have reduced lamb growth rates. However, recent rainfall and frosts in many cropping regions have caused some winter crops to be downgraded to feed quality. Accordingly, feed grain prices are expected to fall, allowing producers to feed lambs to heavier weights for the remainder of the year. Overall, slaughter weights in 2008-09 are expected to average slightly lower than in 2007-08. Assuming an improvement in seasonal conditions in the remainder of 2008-09, sheep slaughter is forecast to decline by 6 per cent to 11.2 million head. This forecast has been revised upward from the September forecast because of higher sheep slaughter from July to September 2008, a result of poor spring seasonal conditions in many regions. Overall, mutton production is forecast to fall by 7 per cent to 241 000 tonnes in 2008-09. |
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| State differences provide flexibility for the future | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The changing composition and declining size of the Australian sheep flock have been well documented. Here, state-level data are analysed to provide information on some of the changes which have been observed at the national level. The Australian sheep industry is concentrated in three states: New South Wales, Western Australia and Victoria. In 2007-08, these states accounted for approximately 80 per cent of sheep in Australia. This proportion has changed little in the past 20 years. The primary focus of sheep industries in each state varies between meat and wool production. Victoria is the state most focussed on sheep meat. In 2007-08, Victoria accounted for 44 per cent of Australia’s lamb slaughter, 30 per cent of sheep slaughter, and 22 per cent of the total flock. New South Wales and Western Australia are more focussed on wool production, with the shares of lamb and sheep slaughter in these two states lower than the shares of total sheep numbers. While land quality explains some of this difference, there is greater capacity to shift from wool to sheep meat production within the sheep industries of New South Wales and Western Australia than in Victoria, depending on relative price changes. The Western Australian sheep market often behaves differently to the markets in the eastern states because of its relatively small domestic market, the high cost of transporting sheep and meat to and from the other states, and differences in seasonal conditions. For example, in the first quarter of 2008-09, sheep slaughter in the eastern states was 20 per cent higher year on year, but in Western Australia it was 3 per cent lower. Conversely, lamb slaughter was down 13 per cent on average in the eastern states, but up 6 per cent in Western Australia over the same period. Sheep meat prices have also been lower in Western Australia. In the first quarter of 2008-09, saleyard sheep and lamb prices in Western Australia were 24 per cent and 20 per cent lower, respectively, than the average prices in New South Wales, Victoria and South Australia. Also reflecting the small size of the domestic sheep meat market, the Western Australian sheep meat industry is much more focussed on the live sheep trade than the eastern states. Since 2000-01, the number of sheep exported live from Western Australia has been greater than the number of sheep slaughtered. This is in contrast to the eastern states, where live exports account for a small proportion of total turn-off. Between 2004-05 and 2007-08, the proportion of total live sheep exports shipped from Western Australia fell from 86 per cent to 74 per cent. In the same period, the share of live exports from Victoria and South Australia increased from 12 per cent to 26 per cent. |
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| Lamb exports to fall as supply tightens | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Between July and September of 2008-09, Australian lamb exports were down 22 per cent year on year. This fall reflects both lower lamb production and some decline in demand for Australian lamb in export markets. High domestic lamb prices and the strength of the Australian dollar relative to the currencies of trading partners also contributed to lower export volumes over this period. The significant depreciation in the value of the Australian dollar has increased the competitiveness of Australian lamb in export markets, and this is expected to support demand for the remainder of the year. However, because of lower expected production in Australia, lamb exports are forecast to decline by 7 per cent in 2008-09 to 152 000 tonnes. The United States is the largest export market for Australian lamb, accounting for an average of 28 per cent during the past five years. From July to September 2008, exports to the United States were 41 per cent lower relative to the same period in 2007-08. This fall can be attributed to lower lamb production, higher lamb prices, the higher value of the Australian dollar and weaker demand for Australian lamb as economic conditions in the United States deteriorated. Despite some reversal in most of these factors in recent months, exports to the United States in October and November 2008 remained around 15 per cent below 2007 levels. Overall in 2008-09, exports to the United States are forecast to decline by 14 per cent to 36 000 tonnes. Mutton exports in the first quarter of 2008-09 were 3 per cent higher relative to the same period in 2007-08, reflecting rising mutton production and strong demand, particularly from markets in the Middle East. In 2008-09, mutton exports are forecast to fall by around 3 per cent to 153 000 tonnes. This forecast has been revised up since the September edition of Australian commodities because of higher sheep slaughter in the first three months of 2008-09, as seasonal conditions remained poor in many sheep producing regions. |
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| Live exports to fall as sheep numbers decline | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In the first three months of 2008-09, live sheep exports increased by 21 per cent year on year. Reflecting the strong demand for live sheep, average prices also increased by approximately 14 per cent during the quarter. Live sheep exports are forecast to fall by 4 per cent to 3.9 million head in 2008-09 as the number of sheep available for live export declines, particularly in Western Australia. This forecast is based on lower sheep numbers following two years of high sheep slaughter and the assumption of improved seasonal conditions in the remainder of 2008-09. |
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