Ben Thomas and Angus Brown presented on sheep and lamb prices. They projected that lamb slaughter will reach a record 22.25 million head in 2015. Lamb production is also forecast to be a record 492,000 tonnes. Record lamb exports of 250,000 tonnes are expected. National saleyard lamb prices are predicted to reduce seasonally but remain strong. Mutton slaughter is forecast to remain lower than 2010-2012 levels due to smaller flock sizes. Supply is the main driver of lamb and mutton markets, though mutton supply depends more on weather conditions.

1. What will drive sheep and lamb prices?
28 July 2015
Presented by:
Ben Thomas, MLA & Angus Brown, Ag Concepts Unlimited / Mecardo
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3. July sheep & lamb projections
Ben Thomas

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Information contained in this publication is obtained from a variety of third party sources. To the best of MLA’s knowledge
the information accurately depicts existing and likely future market demand. However, MLA has not verified all third party
information, and forecasts and projections are imprecise and subject to a high degree of uncertainty.
MLA makes no representations and to the extent permitted by law excludes all warranties in relation to the information
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5. About MLA
Meat and Livestock Australia Ltd (MLA) strives to be the
recognised leader in delivering world class research,
development and marketing outcomes that benefit
Australian cattle, sheep and goat producers.
Working in collaboration with the Australian Government
and wider red meat industry, MLA's mission is to deliver
value to levy payers by investing in initiatives that
contribute to producer profitability, sustainability and
global competitiveness.
MLA is a producer owned, not-for-profit organisation
and not an industry representative body.

6. MLA Membership

7. Industry structure

8. MLA does not collect or set the levy
Producer levy

9. Levy allocation summary

10. Small improvement in rainfall in NSW

11. Some year-on-year comparisons
According to ABS data, after 5 months in 2014...
• Lamb slaughter was 9.12 million head
• Mutton slaughter was 4.5 million head
Nationally, we went on to kill
• 22.25 million lambs
• 10.1 million sheep
Where are we up to this year…
• Lambs at 9.6 million head – up 5%
• Sheep slaughter at 3.6 million head – down 21%

12. Monthly lamb slaughter
Source: ABS
J F M A M J J A S O N D
0
500
1000
1500
2000
2500
'000 head
2013 2014 2015

13. Historically high lamb turn-off to continue
Source: ABS, MLA forecasts
96 98 01 02 04 06 08 10 12 14 16f 18f
0
5
10
15
20
25
million head
f = forecast

14. Lamb production tipped to be a record
Source: ABS, MLA forecasts
91 93 95 97 99 01 03 05 07 09 11 13 15f 17f 19f
0
100
200
300
400
500
600
'000 tonnes cwt
15
17
19
21
23
25
kg/headproduction carcase weight
f = forecast

15. Mutton slaughter to stay lower year-on-year
Source: ABS, MLA forecasts
96 98 01 02 04 06 08 10 12 14 16f 18f
0
5
10
15
20
million head
e = estimate, f = forecast

16. National turn-off to continue growing
Source: ABS, MLA forecasts
91 93 95 97 98 01 03 05 07 09 11 13 15f 17f 19f
31 March until 1999, 30 June from 2000
0
50
100
150
million head
20
25
30
35
40
45
50
% turn-offflock turn-off as% of flock
f = forecast

17. Lamb exports forecast to be a record
Source: DA, MLA forecasts
95 97 99 01 03 05 07 09 11 13 15f 17f 19f
0
50
100
150
200
250
300
'000 tonnes swt
0
10
20
30
40
50
60
% exported
Exports(LHS) % production exported (RHS)
f = forecast

18. Lamb export unit values creeping higher
Source: GTA
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
0
2
4
6
8
10
12
A$/kg
US China UAE World

19. China – largest producer and consumer

20. NZ slaughter and production steady
Source: Statistics New Zealand
J F M A M J J A S O N D
0
500
1000
1500
2000
2500
3000
3500
'000 head
2013 2014 2015

21. National saleyard lamb prices…stay above $5?
Source: MLA'sNLRS
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
0
100
200
300
400
500
600
700
A¢/kg cwt Light lamb Trade lamb Heavy

22. Conclusion
• Lamb slaughter to reach 22.25 million head
• Lamb production to reach 492,000 tonnes cwt
• Record lamb exports – 250,000 tonnes swt
• Lamb prices to reduce seasonally, but remain strong?

23. MLA daily indicators – nlrs@mla.com.au

24. 2015 lamb supply exceeds all expectations –
but fall still expected in ‘16 and ‘17
15,000
16,000
17,000
18,000
19,000
20,000
21,000
22,000
23,000
24,000
'000 head
Actual MLA Estimates
Source: ABS, MLA estimates
Figure 1. Lamb slaughter and forecasts

25. Lamb slaughter as % of flock to reach record
40
50
60
70
80
90
100
110
10%
15%
20%
25%
30%
35%
Flock (rhs)
Lamb slaughter % of flock
Source: ABS, MLA estimates
Figure 2. Flock size and lamb turnoff
Lamb % of flock million head

26. Supply vs price equals demand
0
100
200
300
400
500
600
1.20 1.40 1.60 1.80 2.00
Averageprice¢/kgcwt
Average monthly slaughter (million head)
Figure 3. Lamb Demand curves
00/01 to 03/04
03/04 to 07/08
08/09 to 12/13
2013/14
2014/15-2018/19f
Source: ABS, MLA, ACU

27. Price forecast based on supply projections –
assuming steady demand….
150
250
350
450
550
650
13000
15000
17000
19000
21000
23000
¢/kg cwt'000 head
ESTLI
Source: ABS, MLA, ABARES, ACU Bars = slaughter (LHS)
Figure 4. Lamb slaughter and prospective prices

28. Within season variation – average +/-12%
350
400
450
500
550
600
650
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
¢/kg cwt
5-yr av. 2015/16 2014/15 2013/14
Source: MLA's NLRS
Figure 5. Eastern States Trade Lamb Indicator

29. Mutton slaughter down – but not to 2010-2012
levels
60
65
70
75
80
85
90
95
100
105
2
4
6
8
10
12
14
16
18
20
Live Exports (lhs)
Slaughterings (lhs)
Flock (rhs)
Source: ABS, MLA estimates
Figure 6. Sheep turnoff , flock size and forecasts
million head million head

30. Mutton supply depends more on weather
0
50
100
150
200
250
300
350
400
450
0.0 2.5 5.0 7.5 10.0 12.5 15.0 17.5 20.0
Averageprice¢/kgcwt
Total annual slaughter (million head)
Figure 7. Sheep supply vs price
2000-02 2003-11 2012-13
2014-15 2016
Source: ABS, MLA, NLRS
2016 projection - wet
2016 projection - median r'fall
2016 projection - dry

31. Spread to ESTLI low – demand lower?
-350.00
-300.00
-250.00
-200.00
-150.00
-100.00
-50.00
0.00
2007 2009 2011 2013 2015
¢/kg cwt
Spread
Figure 8. ESTLI & national mutton indicator
Source: MLA's NLRS

32. Something to think about?
-200.00
-100.00
-
100.00
200.00
300.00
400.00
500.00
600.00
700.00
800.00
Figure 9. ESTLI and EYCI
ESTLI EYCI Spread

33. Take home messages
» Lamb and mutton markets are supply driven
» The shift to lamb production is maintaining
supply despite falling flock
» Mutton supply will be impacted more by
season than lamb
» Significantly higher lamb and mutton prices
may require improved export demand
» Can better cattle prices drag lamb higher?

34. More information & Survey
» More info - Jenianne Hall:
– jhall@mecardo.com.au, 0438 624 154
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month of Mecardo Premium for free