Seasonal Trends in Sheep and Lamb Production
Sheep and lamb production in Australia follows a seasonal pattern. Conception typically starts in January or February, leading to births in June or July.
During the spring, pastures grow at their fastest rate, providing an ideal environment for weaning lambs and helping them gain weight. This season usually sees the highest supply of lambs.
Record Levels of Sheep Slaughter in 2023
This year, sheep slaughter rates are 16% higher compared to 2022, indicating an oversupply in the market. Unlike the slight dip observed in October and November of 2022, this year is expected to maintain high slaughter rates due to favourable weather conditions on the east coast.
Furthermore, the nation’s breeding ewe flock is set to reach its highest level since 2007, with an estimated 46.14 million head.
Impact on Prices and Indicators
The oversupply has led to a significant easing of sheep indicators, ranging from 36% to 68%. Mutton prices have experienced a sharp decline, falling by 70%.
In contrast, heavy lamb, considered a premium product, has seen a more moderate price drop of 36%. This suggests that premium lamb indicators are relatively stable compared to commodity lamb.
Supply and Demand Dynamics
With slaughter rates at an all-time high, the supply of lambs could soon outstrip processor demand. As new lambs enter the market during the spring flush, older lambs may no longer meet processor specifications.
Industry Definitions and Implications
The industry defines a ‘lamb’ as a young sheep under 12 months of age or one without any permanent incisor teeth in wear.
Once a sheep reaches 12 months or breaks teeth, it is classified as ‘mutton’. As of 12 October, the mutton indicator stands at 121¢/kg carcase weight (cwt), while the trade lamb indicator is at 454¢/kg cwt. Producers who cannot find a market for their stock as they age out of lamb specifications could face a discount of 26.6%.
In summary, the Australian lamb and sheep market is currently experiencing an oversupply, affecting both prices and slaughter rates.
While this has led to a decline in prices, especially for mutton, the impact on premium lamb has been less severe. Producers need to be cautious as the high supply could soon outweigh demand, particularly for older lambs that no longer meet processor requirements.