Sheep, lamb and cattle slaughter increased in the eastern states last week as the drought drags on.
This pushed all sheep indicators, except the restocker lamb price, down between 6-15 cents a kilogram after Monday’s trading, with heavy lambs sitting on 641c/kg, down 21c/kg for the week.
The sheep market is holding up better than cattle however, with all lamb prices remaining above the same time last year, and trade lambs at the biggest premium of 31c/kg.
And those prices aren’t going anywhere, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).
ABARES released its latest commodity outlook on Tuesday, forecasting the lamb price to average 614c/kg carcase weight for 2017-18, and predicting that to rise to 725c/kg for 2018-19, before dropping to 715c/kg in 2019-20.
“Despite high sheep slaughter, saleyard sheep prices in 2018–19 are expected to remain historically high as a result of strong global demand for sheep meat,” ABARES said in its report.
“They are expected to remain high in 2019–20 and throughout the medium term.
“This is due to ongoing strong demand and lower Australian mutton production as farmers rebuild flocks in Eastern Australia.”
Not faring so well is the Eastern Young Cattle Indicator (EYCI), which opened the week at 428.75c/kg, nearly 115c/kg below the same time last year.
It is also the lowest the EYCI has dropped since April 1, 2015.
Meat & Livestock Australia’s market information service shed some light on this decline, pointing out “despite there being more young cattle falling outside the EYCI category in 2019 compared to 2018 and 2017, the supply of EYCI cattle has remained firm as the young cattle destocking continues and many producers run low on feed and water”.
“Of all young cattle sales in 2017, 5.8 per cent were in the ‘poor condition’ category and did not meet EYCI eligibility,” MLA said.
“In 2018, this proportion rose to 15.3pc as seasonal conditions deteriorated.
“This trend has continued into 2019, as 17.7pc of young cattle in saleyards covered by the National Livestock Reporting Service have been below EYCI condition specifications.”
The discount for those young cattle in too poor condition to be included in the EYCI has also increased significantly, starting at 47c/kg in 2017, increasing to 64c/kg in 2018 and jumping to 98c/kg so far this year.
ABARES forecasts the beef price will keep falling, down 3pc to 430c/kg in 2019-20 because of higher global production and increased export market competition.
ABARES estimates the 2017-18 saleyard price as averaging 452c/kg, and predicts that will fall to 445c/kg in 2018-19.
Restocking demand for sheep and cattle would not have been buoyed by the Bureau of Meteorology’s latest seasonal outlook released on Friday.
BoM long-range forecasting manager Andrew Watkins said lower layer soils in Eastern Australia were “much drier than usual” and also water levels were particularly low in the Murray Darling Basin, and Southern Victoria.
Mr Watkins also said there was double the normal risk of an El Nino forming in the coming months.
"The autumn outlooks shows drier than average conditions are likely for much of Northern and Easter Australia, indicating a dry end to the northern wet season, and a dry start to the southern cool season," he said.
"Timing for autumn break rainfall in Southern Australia is likely to be average or later than average.
"Autumn days and nights are very likely to be warmer than average… and very dry soils inland mean heatwaves may continue into autumn."