Positive outlook for Australian sheep sector
MLA explained that improved seasonal conditions, combined with high lamb prices in 2011 and strong global demand, will help the industry flourish next year. The association forecast a 6.4% increase in lamb supply that will result in lower prices, relieving the pressure felt by processors in the past few months.
“Lamb supplies will increase in 2012, so prices are expected to be lower than the record levels reached in 2011. However, continued strong demand, particularly from export markets, should see good producer returns continue,” said MLA chief economist Tim McRae.
Sheep and lamb slaughter is expected to recover from the low numbers seen in 2011, with an 8% and 7.4% growth respectively. However, a decline in lamb carcase weight will mean a slightly lower increase in lamb production (6.4%).
MLA forecast a 7.2% rise in sheep meat exports to 208,000t cwt, or 49% of national production. The lower prices forecast throughout the supply chain, combined with New Zealand’s expected drop in flock numbers, will ensure Australia’s competitiveness on international markets, especially the Middle East, the US and Greater China.
“Lamb exports now generate a much higher proportion of income than in previous years, with a record 48.5% of total lamb production sent offshore in 2011. The Middle East was the largest export market with 34,893 tonnes swt (22%), followed by the US, 21%, and the growing Greater China, 18%. These markets are expected to continue to grow, with the US starting to recover in 2012,” McRae added.
The association even predicted that exports would account for a bigger proportion of production than the domestic market by 2016.
Live sheep exports should recover in 2012, after the decline observed in 2011. The main markets will remain Kuwait, Qatar, Bahrain and Turkey. Exports to Saudi Arabia are likely to stay low due to Australia’s inability to compete on price with east African countries such as Sudan and Somalia.
