Australian sheepmeat industry on track for record-breaking run

Record prices and booming production are expected to catapult the gross value of Australia’s sheepmeat industry to an all-time high of more than $5 billion by the end of the financial year.

And that’s not the only record looming, according to the new March quarter outlook from the Australian Bureau of Agricultural and Resource Economics and Sciences.

Buoyed by increased domestic supply and international demand, Australian sheep meat exports were forecast to hit a record high value of $4.4b in 2021-22 and continue rising in the medium-term.

Strong demand from the US was partly driving the trend, with Australian sheepmeat exports to the US 45 per cent higher between July and November last year than the same time in 2020.

“In the United States, meat prices have been rising faster than general price inflation and domestic sheep meat production has been relatively low,” the report explained.

“These two factors have been driving up the value of Australia’s sheepmeat exports to the country.”

The other factor behind surging Aussie exports was rising sheepmeat production, which was tipped to increase 5 per cent to about 690,000 tonnes this financial year on the back of a national herd rebuild and increased lamb and sheep slaughter.

Lamb slaughter was expected to rise by one per cent to 21 million head in 2021–22, while sheep slaughter was expected to rise by 11 per cent to six million head.

“Slaughter is increasing due to ongoing flock rebuilding, which means more lambs and sheep are available for slaughter than last year,” ABARES said.

“In 2021–22, the increase in sheepmeat production is expected to lead to higher export volumes, which are forecast to rise by 12 per cent to around 480,000 tonnes.”

The Eastern States would account for the bulk of exports, with WA contributing just 18 per cent of Australia’s sheepmeat exports in 2020-21.

During the same period, however, WA accounted for more than 90 per cent of Australia’s live sheep exports.

In New Zealand — a major competitor for market share in Australia’s biggest export markets of China and the US — sheepmeat supply is forecast to ease this financial year and next, supporting global demand for Australian product.

At home, lamb and sheep prices were both forecast to hit record highs this financial year.

Lamb saleyard prices were expected to increase 14 per cent to 893¢/kg, while sheep saleyard prices would rise 7 per cent to 648¢/kg.

Strong export demand from the US was driving the high prices, which were expected to continue rising next financial year.

“If the pace of the global economic recovery is slow, prices are expected to continue increasing until 2023–24, as higher global inflation supports global demand for sheepmeat,” ABARES said.

“However, over the medium term to 2026–27, domestic lamb and sheep prices will also be influenced by seasonal conditions.

“Although the timing of a dry year is uncertain, the occurrence of drought-like conditions is expected to weigh on saleyard prices in both (slow and fast economic recovery) scenarios.”