THE Australian sheep slaughter has spiked to three-year highs and a senior analyst says the national sheep flock is likely to decline, with the high sheep slaughter unlikely to be replaced by lambs.
Angus Brown of multi commodity risk management advisory and market intelligence service Mecardo says drought-affected producers have bitten the bullet and decided to cash in some sheep.
“We haven’t seen sheep slaughter this high since the autumn of 2015,” he says in a new report.
“There has been a lift across the big three states. Victoria is killing 50 per cent more sheep than this time last year, New South Wales is up 33 per cent and South Australia has doubled its kill.”
For the first time ever, all of NSW is now drought-declared,
Sheep slaughter does normally lift at this time of year and continues to rise through until the end of the year.
“However, it doesn’t normally rise this much, with slaughter of more than 140,000 head normally reserved for the spring and summer months,” Brown says.
Lamb marking rates are well down in parts of NSW. Culling dry ewes is what normally starts to lift slaughter rates and high numbers of dry ewes are likely adding to supply.
“The rise in sheep slaughter has taken up kill space made available by the tightening supply of lambs,” Brown says.
Mutton prices have reacted as they should when supply increases by 50 per cent and the national mutton indicator lost 15 per cent in a month, but prices remain stronger than this time last year.
“Mutton prices have actually never been this strong at this time of year, which says something for the current demand strength,” Brown says.
“If sheep slaughter rates continue at these levels for the rest of the year, the flock will take a hit. In 2015, we had three months of slaughter around 150,000 head and that year the flock declined two per cent.”
Meat and Livestock Australia reports the year-to-June national lamb slaughter topped 12 million head for the first time, up nine per cent year-on-year to 12.02 million head,
The sheep slaughter in the first half was up 26 per cent year-on-year to 4.15 million head.
Lamb production rose nine per cent to 277,000 tonnes. Mutton production was up 19 per cent at 96,000 tonnes.