Mecardo Analysis - Lamb and sheep slaughter leaving a dearth for later
- By: "Farm Tender" News
- Ag Tech News
- Mar 14, 2019
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The weekly sheep and lamb slaughter figures suggest supplies have been strong. The official numbers from the Australian Bureau of Statistics (ABS) for January confirm there are more sheep and lambs being killed than last year and that things are likely to change, at some stage.
The official slaughter numbers for January showed that we kicked off the year at elevated sheep and lamb supply levels. For the first time ever, January lamb slaughter was over 2 million head. This was 4.5% above 2018 and 9% higher than the five-year average.
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Based on Meat and Livestock Australia’s (MLA) weekly slaughter numbers we expect February lamb slaughter to be similar to last year and lower than January. Figure 1 shows falling slaughter in February bucks the usual five-year trend, although the last few years has seen strong January demand pulling stock forward.
On the sheep front, slaughter has been exceptionally strong. January sheep slaughter hit a five year high, and 2014 is the only year out of the last 10 it has been higher. 17% more sheep were killed than in 2018 and 8% more than the five-year average.
In February we don’t think sheep slaughter slowed. In fact, it is likely to have risen sharply. MLA’s weekly figures suggest sheep slaughter will have gained around 27% in February, with over 900,000 head slaughtered nationally.
While the drought has been afflicting New South Wales the most, it is Victoria where the extra kill space has shown up. In January Victorian lamb slaughter was up 9% and sheep slaughter was 21% higher. South Australia had the strongest sheep slaughter increase, however, killing 66% more sheep than last January. WA also saw stronger sheep supply, up 25%.
The stronger supply has seen prices ease, but not as much as we might expect. Strong export demand has soaked up the extra supply, with prices still historically very strong, especially for lamb.
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Key points
* Sheep and lamb slaughter was much stronger in January, while lamb slaughter is likely to have eased in February.
* All markets have seen stronger sheep slaughter in January and it extended into February.
* To reach MLA’s target annual slaughter levels, supply is going to have to contract sharply.
What does this mean?
Figures 1 and 2 show how slaughter will pan out if we are to reach MLA’s projected levels, with normal seasonality applied. The longer sheep and lamb slaughter remains strong, the more the coming months will have to be below last year’s levels to hit the slaughter target.
Obviously, there is a good chance this year’s slaughter will exceed MLA’s projections. This will only result in tighter supply in the coming years, kicking the strong price can further down the road.
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