Rebuilding livestock numbers set to be a long road to recovery

But as the seasons passed and rain didn’t fall, the opposite was the reality for many, with stock turned off and the bare minimum held onto in the hope things would turn around.

And while rain has now been received in parts of the country, the drought remains stubbornly in place for many, and the nation’s flocks and herds continue to decline. The difference this time around, however, is prices remain historically high for both sheep and cattle, offering relief to those forced to put them on the market, but also offering encouragement to get rid of breeding stock rather than pay high rates to feed them.

With sheep slaughter up 27 per cent from January to July this year, and cattle slaughter up 10pc for the year-to-date, the question remains how steep the road to rebuilding national numbers will be when the drought breaks.

National sheep slaughter for the month of August was up 57pc year-on-year, according to Meat and Livestock Australia (MLA), with Victoria slaughtering 470,000 head, its highest monthly total since 1993.

MLA’s latest industry outlook forecasts an extra 23pc of sheep will be slaughtered this year compared to 2017, decreasing the national flock by 5.5pc to 68 million.

Independent Commodity Services Andrew Woods said the impact of the failed spring was evident in many regions, with the sheep outlook now dependent on good summer rainfall in northern NSW, with drought in NSW causing the biggest impact on sheep numbers.

“What happens over the next six months is quite important. If northern NSW get a summer season that could change things… and take the pressure off,” he said.

“Sheep numbers are getting drawn down but we will only really start to feel the impact on production in the next calendar year.”

MLA predicts total lamb production for 2018 to be close to year before levels at 511,000 tonnes carcase weight, however sheep production will likely rise 13pc to 213,000 tonnes.

In turn they forecast sheep production to drop in 2019, by a considerable 46,000 tonnes, and lamb production to dip to 507,000 tonnes, which is pre-2015 levels.

Mr Woods said this tightening of numbers, not just in Australia but globally, would support both the lamb and mutton price going forward.

“There are less sheep around the world than a decade ago, which helps support lamb price, and that helps mutton price – supply and demand wise sheep looks excellent, and will support a higher price compared to other red meats,” he said.

“Normally in drought like this we would see mutton prices under pressure coming into November, but this is different because not that many numbers around.”

The mutton price sits at 453c/kg this week, 30c/kg higher than a year ago, and breeding ewes are breaking records across the country.

Mecardo analyst Angus Brown said high slaughter rates were likely to continue, and while it was unlikely to reach the 2015 herd decline level of 6pc, it could be as high as 4pc.

“A 2pc decline in the herd will see it fall back to 2016 lows – we all know what that did to cattle prices when the rain finally came,” he said.