Sheep offloading continues

Sheep offloading continues


Sheep
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A dry January and high feed costs have seen producers offloading sheep in preference to feeding them.

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SIMILAR to the cattle situation, sheep slaughter started the year running apace.

A dry January and high feed costs have seen producers offloading sheep in preference to feeding them through the summer.

It took until August in 2018 for weekly sheep slaughter rates to go past 150,000 head and we haven’t seen it at this level in January since 2015 (Figure 1).

The biggest sheep slaughter state, Victoria, is driving the increased rates.  

FIGURE 1: East coast sheep slaughter. 32pc more sheep have been slaughtered in the second two weeks of 2019 on the east coast, compared to the year earlier.

FIGURE 1: East coast sheep slaughter. 32pc more sheep have been slaughtered in the second two weeks of 2019 on the east coast, compared to the year earlier.

Sheep slaughter is up 44pc on last year and back at December levels already.

In NSW, there have only been 5pc more sheep slaughtered than last year but it’s still up 19pc on the five-year average.

NSW was already feeling the pain this time last year and have processedquite a lot of sheep.

While things are dry in Victoria, we would think with the price of lamb and wool, producers might be trying to retain breeding sheep.

However, it looks like the price of grain and a potentially long summer of feeding might have seen many producers make the decision to quit anything which isn’t essential for breeding.

When we look at early 2019 slaughter rates and official numbers from the Australian Bureau of Statistics (ABS), a picture of flock liquidation seems to be on the horizon.

The last 8 months of 2018 saw above average sheep slaughter and very high levels for the last five. This year has started on the same level.

It’s increasingly looking like fewer ewes will be joined this year, with many having already headed to processors.

These figures also make us wonder where the sheep are going to come from for slaughter once it does rain again.

What does it mean?

There is a chance that with a good season, sheep slaughter rates could return to lows of 2011 which will bring with it very good prices for both sheep and lambs.

However, very tight supply isn’t great for feeding our growing export markets and could be an issue in the medium term.

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