In February, MLA tipped the Australian sheep flock to reach 78.75 million head this year, the biggest flock numbers since 2007.
The increase in supply has seen the Australian Bureau of Agricultural Resource Economics and Science forecast the value of sheepmeat production to fall to $4.4b in 2022-23 in their latest Agricultural Commodities Report.
A further drop to $4.3 billion is expected in 2023-24 due to lower prices offsetting increased turnoff.
Lamb prices are also expected to fall, due to the rising supply of finished animals for slaughter.
This all adds up to a five per cent drop (or 691Ac/ kilogram) for producers in 2023/24.
In 2022-23, the quantity of sheep meat produced is expected to rise to 744,000 tonnes due to increased turnoff and higher weights of lambs and sheep.
Less favourable seasonal conditions are also expected to encourage turnoff of livestock and carcase weights are also expected to decrease year-on-year due to less pasture growth.
Over the medium term to 2027-28, the value of production is expected to continue in an upward trajectory thanks to increasing production volumes.
ABARES say lamb and sheep saleyard prices are expected to peak in 2025-26 before moderating.
The volume of lamb and mutton production is expected to increase due to higher turnoff rates during drier years.
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Lower global demand and high saleyard numbers is expected to be another factor pushing prices down.
However, the value of sheep meat exports in 2023-24 is expected to remain high because of record production volumes and strong demand.
Demand is expected to improve due to income growth and easing inflation in Asian markets.
Import demand from China particularly is expected to be strong due to stronger economic growth.
Live sheep exports are forecast to increase by 6pc in 2022-23 to around 520,000 head due to increased demand in the Middle East.
After that, from 2023-24, live sheep exports are expected to weaken due to subdued economic growth and less available sheep in Western Australia.
This is in line with the long-term decline of live sheep export volumes and the flock in the west.
In 2023-24, lamb saleyard prices are forecast to decrease to 691c/kg.
Sheep saleyard prices are forecast to fall to 430c/kg due to increased supply of older sheep.
EXPORT OUTLOOK
Export demand in the United States for sheepmeat is expected to weaken due to subdued economic growth.
Over the medium term, ABARES says key export markets have uncertain economic outlooks.
An increasingly diverse range of export markets and a broader demand base from markets in Asia - such as the Republic of Korea, Papua New Guinea, and Malaysia may help to offset weakening consumer demand in existing key export markets.
It is expected that there will be an expansion of mutton and lamb consumption in both retail and dine in food services in these Asian markets.
Free Trade Agreements that are expected to come into effect over the outlook period are the United Kingdom FTA, the Australia-India Economic Cooperation and Trade Agreement (IA-ECTA) and the European Union FTA.
