What will drive sheep and lamb prices?28 July 2015
Presented by: Ben Thomas, MLA & Angus Brown, Ag Concepts Unlimited / Mecardo
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July sheep & lamb projectionsBen Thomas
Disclaimer
Care is taken to ensure the accuracy of the information contained in this publication. However MLA cannot accept responsibility for the accuracy or completeness of the information or opinions contained in the publication. You should make your own enquiries before making decisions concerning your interests. MLA accepts no liability for any losses incurred if you rely solely on this publication.
Information contained in this publication is obtained from a variety of third party sources. To the best of MLA’s knowledge the information accurately depicts existing and likely future market demand. However, MLA has not verified all third party information, and forecasts and projections are imprecise and subject to a high degree of uncertainty.
MLA makes no representations and to the extent permitted by law excludes all warranties in relation to the information contained in this publication. MLA is not liable to you or to any third party for any losses, costs or expenses, including any direct, indirect, incidental, consequential, special or exemplary damages or lost profit, resulting from any use or misuse of the information contained in this publication.
Care is taken to ensure the accuracy of the information contained in this publication. However MLA cannot accept responsibility for the accuracy or completeness of the information or opinions contained in the publication. This information is not medical advice and you should consult a health professional before making any decisions concerning your interests.
About MLA
Meat and Livestock Australia Ltd (MLA) strives to be the recognised leader in delivering world class research, development and marketing outcomes that benefit Australian cattle, sheep and goat producers.
Working in collaboration with the Australian Government and wider red meat industry, MLA's mission is to deliver value to levy payers by investing in initiatives that contribute to producer profitability, sustainability and global competitiveness.
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Producer levy
• MLA
• Animal Health Australia
• National Residue Survey
Levy allocation summary
Small improvement in rainfall in NSW
Some year-on-year comparisons
According to ABS data, after 5 months in 2014...
• Lamb slaughter was 9.12 million head
• Mutton slaughter was 4.5 million head
Nationally, we went on to kill
• 22.25 million lambs
• 10.1 million sheep
Where are we up to this year…
• Lambs at 9.6 million head – up 5%
• Sheep slaughter at 3.6 million head – down 21%
Monthly lamb slaughter
Source: ABSJ F M A M J J A S O N D
0
500
1000
1500
2000
2500'000 head
2013 2014 2015
Historically high lamb turn-off to continue
Source: ABS, MLA forecasts96 98 01 02 04 06 08 10 12 14 16f 18f
0
5
10
15
20
25million head
f = forecast
Lamb production tipped to be a record
Source: ABS, MLA forecasts91 93 95 97 99 01 03 05 07 09 11 13 15f 17f 19f
0
100
200
300
400
500
600'000 tonnes cwt
15
17
19
21
23
25kg/head production carcase weight
f = forecast
Mutton slaughter to stay lower year-on-year
Source: ABS, MLA forecasts96 98 01 02 04 06 08 10 12 14 16f 18f
0
5
10
15
20million head
e = estimate, f = forecast
National turn-off to continue growing
Source: ABS, MLA forecasts
91 93 95 97 98 01 03 05 07 09 11 13 15f 17f 19f
31 March until 1999, 30 June from 2000
0
50
100
150
million head
20253035404550
% turn-off flock turn-off as % of flock
f = forecast
Lamb exports forecast to be a record
Source: DA, MLA forecasts95 97 99 01 03 05 07 09 11 13 15f 17f 19f
0
50
100
150
200
250
300'000 tonnes swt
0
10
20
30
40
50
60% exported
Exports (LHS) % production exported (RHS)
f = forecast
Lamb export unit values creeping higher
Source: GTA
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 150
2
4
6
8
10
12A$/kg
US China UAE World
China – largest producer and consumer
NZ slaughter and production steady
Source: Statistics New ZealandJ F M A M J J A S O N D
0
500
1000
1500
2000
2500
3000
3500'000 head
2013 2014 2015
National saleyard lamb prices…stay above $5?
Source: MLA's NLRS00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
0100200300400500600700
A¢/kg cwt Light lamb Trade lamb Heavy
Conclusion
• Lamb slaughter to reach 22.25 million head
• Lamb production to reach 492,000 tonnes cwt
• Record lamb exports – 250,000 tonnes swt
• Lamb prices to reduce seasonally, but remain strong?
MLA daily indicators – [email protected]
2015 lamb supply exceeds all expectations – but fall still expected in ‘16 and ‘17
15,000
16,000
17,000
18,000
19,000
20,000
21,000
22,000
23,000
24,000 '000 head
Actual MLA Estimates
Source: ABS, MLA estimates
Figure 1. Lamb slaughter and forecasts
Lamb slaughter as % of flock to reach record
40
50
60
70
80
90
100
110
10%
15%
20%
25%
30%
35%
Flock (rhs)Lamb slaughter % of flock
Source: ABS, MLA estimates
Figure 2. Flock size and lamb turnoffLamb % of flock million head
Supply vs price equals demand
0
100
200
300
400
500
600
1.20 1.40 1.60 1.80 2.00
Aver
age
pric
e ¢/
kg c
wt
Average monthly slaughter (million head)
Figure 3. Lamb Demand curves
00/01 to 03/0403/04 to 07/0808/09 to 12/132013/142014/15-2018/19f
Source: ABS, MLA, ACU
Price forecast based on supply projections – assuming steady demand….
150
250
350
450
550
650
13000
15000
17000
19000
21000
23000¢/kg cwt'000 head
ESTLI
Source: ABS, MLA, ABARES, ACU Bars = slaughter (LHS)
Figure 4. Lamb slaughter and prospective prices
Within season variation – average +/-12%
350
400
450
500
550
600
650
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
¢/kg cwt5-yr av. 2015/16 2014/15 2013/14
Source: MLA's NLRS
Figure 5. Eastern States Trade Lamb Indicator
Mutton slaughter down – but not to 2010-2012 levels
60
65
70
75
80
85
90
95
100
105
2
4
6
8
10
12
14
16
18
20Live Exports (lhs)Slaughterings (lhs)Flock (rhs)
Source: ABS, MLA estimates
Figure 6. Sheep turnoff , flock size and forecastsmillion head million head
Mutton supply depends more on weather
0
50
100
150
200
250
300
350
400
450
0.0 2.5 5.0 7.5 10.0 12.5 15.0 17.5 20.0
Aver
age
pric
e ¢/
kg c
wt
Total annual slaughter (million head)
Figure 7. Sheep supply vs price
2000-02 2003-11 2012-132014-15 2016
Source: ABS, MLA, NLRS
2016 projection - wet
2016 projection - median r'fall
2016 projection - dry
Spread to ESTLI low – demand lower?
-350.00
-300.00
-250.00
-200.00
-150.00
-100.00
-50.00
0.00
2007 2009 2011 2013 2015
¢/kg cwt
Spread
Figure 8. ESTLI & national mutton indicator
Source: MLA's NLRS
Something to think about?
-200.00-100.00
- 100.00 200.00 300.00 400.00 500.00 600.00 700.00 800.00
Figure 9. ESTLI and EYCI
ESTLI EYCI Spread
Take home messages» Lamb and mutton markets are supply driven» The shift to lamb production is maintaining
supply despite falling flock» Mutton supply will be impacted more by
season than lamb» Significantly higher lamb and mutton prices
may require improved export demand» Can better cattle prices drag lamb higher?
More information & Survey
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