THE big dry is biting hard into Australia’s flock, with sheep slaughter now forecast to rise more than 20 per cent year-on-year.
But international demand for sheepmeat means most sections of the mutton market remain strong.
Meat and Livestock Australia originally predicted a dip in sheep slaughter this year to 7.2 million head, but the weather has turned that on its head.
The latest sheep industry projections, released this week, now say sheep slaughter will instead climb to 9.3 million, up 23pc on 2017.
This will result in a 5 to 6pc decline in the national sheep flock for the year according to MLA markets information manager Scott Tolmie, which could take up to three years to get back.
“This will set us back in flock size for two to three years, to get back to the numbers of the start of this year - that does depend on seasons. A good year could escalate it more quickly but with average seasons it will take a least a couple of years to claw back the numbers,” he said.
Despite clear indications from producers prior to the drought that high lamb, sheep and wool prices had them wanting to expand their flocks, dry conditions have forced them to destock.
And even though there have been varied seasonal conditions, with parts of south west Victoria receiving good rainfall, the movement of sheep across the country by producers searching for markets means slaughter rates and pricing have been impacted in all eastern states.
Mr Tolmie said for mutton to experience such an increase in supply, and still be above year-ago price levels, showed “fundamental strengths” int the market and would encourage producers to get back into sheep when it rained.
Mutton exports for the year to July reached a record unit value of 588c/kg, with Chinese imports of Australian sheepmeat climbing 44pc for the year to August.
Victoria’s September saleyard average price for mutton currently sits at 478c/kg, down from its seasonal June peak of 505c/kg, but still more than 85c/kg above the same month last year.
This is despite an extra 450,000 sheep being slaughtered in Victoria for the year to July – according to the latest figures available - compared to the same period last year.
Elders livestock manager Nigel Starick, Bendigo, said numbers increased by 3000 this week, with about 20,000 mutton sheep offered in Bendigo, and he anticipated numbers would stay high because of the season.
“But they are all being handled by the processors at reasonable rates – it has come off a bit but with the drought conditions we are in it is still good selling for producers, especially compared to historical drought periods,” he said.
Bendigo will hold a lamb store sale of 15,000 head today (Thursday) to further alleviate pressure on feed in the area, Mr Starick said.
“It will get them gone to areas where there is feed and people can handle them better then they can here. It is drying off quickly and crops don’t have a lot in them, so the croppers have a hard decision to make whether they cut them for hay, put sheep on them or leave them for ground cover,” he said.
Mr Starick said while central Victoria would likely retain most of their breeder numbers, with producers not turning extra stock off, just doing it earlier and banking on a good season next year. However he expected a substantial decline in flock numbers in the northern area.
Landmark livestock agent Kelvin Donnan, Ararat, said sheep numbers in his area had remained stable, and for those with the capabilities, mutton sheep were still offering good buying opportunities despite the high price.
“The terms of trade with lambs and wool mean if there is a will to expand the operation, certainly from a profitability point of view the numbers will stack up – no glass ceiling in terms of buying price, it is very attractive,” he said.