Mecardo Analysis - A tighter second half forecast for sheep and lambs
- By: "Farm Tender" News
- Ag Tech News
- Jun 18, 2019
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By Angus Brown | Source: MLA, ABS
Up until May, lamb slaughter was running hot and now it has taken a dive. With Meat and Livestock Australia (MLA) holding their 2019 lamb forecast steady and increasing sheep, it’s worth a look to see how many are expected to be coming forward over the coming six months.
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MLA maintained their lamb slaughter forecast for 2019 at 21.2 million head in their recent industry projections. Official lamb slaughter for the year to April came in at almost exactly the same level as 2018. The difference was just 24,100 head, with 2019 coming in 0.3% lower.
May and June slaughter figures were lower than last year, if we work off the weekly slaughter statistics for the east coast. Our estimates put May at 8.6% lower than last year and June around 12% lower thus far.
Even with lower numbers for May and June, lamb slaughter for the last six months of the year will still need to come in 10% lower than 2018 to meet the 21.2 million head forecast. Figure 1 shows how the 9.65 million head yet to be killed will be spread if normal seasonality prevails.
The actual spread of numbers across the months will no doubt depend on the season. There is, however, going to be some significant deficits in supply compared to last year in order to meet the supply forecast.
For sheep, MLA increased their slaughter forecast by half a million head to 8.5 million on the back of strong levels for the year to date. Up to April, the official slaughter figures tell us the extra 500,000 head have already been killed, with slaughter up 18%. May and June slaughter has been lower, stripping a few numbers out, but it still leaves just 4.01 million head for the last six months.
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To hit the 8.5 million head forecast, sheep slaughter will have to be 1.2 million head or 24% lower than the second half of 2018. The big deficit is partly because second half slaughter in 2018 was very high, but the forecast still comes in under the five year average (Figure 2).
Key points
* MLA supply forecasts for 2019 will have to see a significant decrease in supply in the second half, compared to year earlier
* Spring supplies should be stronger than current levels, but still lower than last year
* Prices are likely to ease from current levels towards the end of the year but should be stronger than 2018
What does this mean?
There should be more sheep and lambs supplied in the spring than we are seeing at the moment, but if we are to hit MLA’s forecasts, slaughter will be a lot smaller than last year.
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With tighter supply comes higher prices. Prices are not likely to be as high as they are now in the spring but they should be ahead of where they were last year.
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