THE red hot East Coast demand for feedlot lambs and breeding stock that has seen close to two million head leave Western Australia in the past year is both an opportunity and a threat, one of the state's most experienced sheep industry marketers says.
Demand from the east is a necessity and the trade will be vitally important if WA's flock is to grow, Elders WA wool manager Dean Hubbard says.
But not at the current level of shipments. Scanned-in-lamb ewe numbers travelling east of late was concerning, he said.
WA has reduced its available breeding ewes by 550,000 for the past two seasons.
Mr Hubbard suggests between 700,000 and 800,000 head per annum sold to the east is sustainable - but he acknowledges market forces can not be overruled.
"Our clients will support WA processing and local industry but they won't subsidise it, so until there is a price evening, we'll continue to see sheep going east," Mr Hubbard told a recent online field day on sheep and cattle markets, the first of the Elders Presents series for 2021.
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Producers say they've secured up to $100 more for first-cross Merino breeding ewes from East Coast buyers over the past 12 months.
The growth of west-to-east sheep sales have raised big questions about the ability of the western flock to rebuild and the future of the wool and sheepmeat game in WA, which historically represents 21 per cent of national flock.
Still, if marking percentages were to improve by 3.5pc per annum, WA could recover to pre-2019 flock levels within two seasons, Mr Hubbard said.
His insight and data around the mighty sheep movement east, and how that looks for the WA industry moving forward, was soaked up at the webinar.
WA's sheep flock is currently sitting at 12.7 million, down a million on last season and back from the 14.3m of a few years ago.
The state is estimated to currently have around 6.6 to 6.8m breeding ewes and Mr Hubbard reported 2021 lamb scan rates appear, anecdotally, in line with last year's better marking rates of 88 to 92pc.
The Australian Bureau of Statistics estimates lambs available for sale this coming season in WA to be around 5.8m to 6m, which would be a reduction of around 600,000 on the previous couple of years.
There was no doubt the WA flock was fragile and under growth pressure, Mr Hubbard said.
The face of WA's sheep turn-off has been changing on several fronts.
Live export numbers through Fremantle were 1.2m two years ago - that sector has traditionally been a huge part of the state's sheep sales landscape.
Last year, it was 811,000 head and this year's estimate is 650,000.
WA has had an annual ban on live sheep exports ex-Fremantle from June 1 to September 1 in place for the past three years.
Live-ex in 2021 is estimated to represent 10pc of sheep and lamb turnoff in the state, compared to the 23pc it represented in 2019.
As competition continues to grow for local sheep and lambs, it could become less profitable for the live export sector to remain interested, Mr Hubbard said.
Meanwhile, 2021 processing will represent 58pc of annual WA turnoff. In 2019, it was 74pc.
The 2021 west-to-east trade will represent 31pc of turnoff, compared to just 2pc in 2019.
That's a dramatic figure in anyone's book but it's not the sole driver of WA's flock decline over the past three years.
Lack of water and competition from cereal crop returns has played a significant role, Mr Hubbard explained.
"A lot of sheep here are run across the wheat and cereal belt. By contrast, cattle aren't on the same competition lines with cereal crops," he said.
Over the past three years the numbers of sheep going from west to east went from 111,000 head to 640,000 to the current 1.9m.
Half of those went to NSW, 26pc to South Australia, 23pc to Victoria and even the country's biggest cattle state, Queensland, took some.
Processors and feedlotters in WA have indicated a strong desire to increase their turnoff, Mr Hubbard said.
That augurs well for producers' selling options and also local industries like transporters, he said.
WA has eight sheep processors, with the four big ones accounting for 85pc of business.
"Feedback suggests post-COVID the majority wish to increase throughput by an average of 25pc," Mr Hubbard said.
"The three larger processors have already, or are currently, making necessary changes for that to occur.
"This is good news. A competitive landscape is a must for the WA flock to grow."
Feedlots, too, are looking to grow rapidly.
Sheep and lamb prices remain at close to all-time highs and supply pressure from now until July will be extremely tight, Mr Hubbard reported.
Demand will certainly outstrip supply in the short to medium term, he said.
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