LOWER lamb production is set to ignite prices in 2017, continuing last year’s trend where lamb prices gained traction on records for the fourth consecutive year.
Meat & Livestock Australia reported a six per cent fall in sheepmeat production last year.
This led to lamb indicators exceeding records last set in 2011, following a drought-induced plummet in flock numbers.
The light lambs saleyard indicator, 12-18 kilograms, climbed 24 cents a kg year-on-year to average 540c/kg carcaseweight.
National restocker lambs, 0-18kg, jumped 33c/kg higher year-on-year, although this was down 19c/kg from the 2011 average, while 16-22kg Merino lambs increased 27c/kg from last year and 20c/kg from 2011.
The national trade lamb (18-22kg) indicator for 2016 was 17c/kg higher than last year, and 11c/kg higher than the previous calendar year record set in 2011, averaging $5.61/kgcwt.
Heavy lambs weighing more than 22kg averaged $5.65/kgcwt, up 17c/kg year-on-year, and a 36c/kg rise on 2011 levels.
This trajectory is set to continue, according to MLA market manager Ben Thomas, who said lamb slaughter was forecast to be down nearly 2pc next year to 22 million.
“That’s on the back of a slightly lower ewe flock, combined with lower marking rates as a result of the flooding through southern Australia,” Mr Thomas said.
This number is being buoyed by nearly 500,000 lambs expected to be carried across from last year, due to the extreme wet conditions delaying lambs coming to market.
“There was an expectation of 23m lambs being killed in 2016, but because of the numbers held back they’re all hitting the market at the moment,” he said.
“For the first quarter of 2017 we are expecting the (supply) number to remain high but with lower marking rates coming into play in the middle six months of the year, from June to September, supply will tighten.
“For lamb producers, there has been a string of about four years where the market has been extremely strong and able to resist increases in production, so with a similar (production) level forecast, 2017 should be a good year.”
Lamb production is expected to fall 2pc to 492,800 tonnes cwt this year, while sheepmeat will decline to 660,000tcwt in 2017 following a fall of 6pc last year.
Mr Thomas said prices were forecast to react to the contraction in supply through the third quarter, although were unlikely to reach $7.50/kg.
Mecardo market analyst Matt Dalgleish said that, based off the slaughter projections, the expected average annual Eastern States Trade Lamb Indicator for 2017 had been revised up from $5.90/kgcwt to $6.30/kgcwt.
