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Thursday, August 20, 2015

How much can lambing percentage impact supply?

By Angus Brown  |  Source: MLA's NLRS

Key points

  • Increased lamb marking percentages are again being anecdotally reported this year, even after last year’s rise.
  • Marking percentages were relatively steady for the three years prior to 2014, and had little impact on slaughter lamb supply.
  • If the ewe flock is relatively steady, every percentage point increase in marking percentages will add around 300,000-400,000 head to the lamb supply.

2015-08-20 Marketing Rates FIG 1

2015-08-20 Marking Rates FIG 2

We are again hearing reports of better lamb marking percentages this year, even after the good year last year that saw more lambs produced from fewer ewes. Marking percentages are one of the great unknowns when assessing lamb supply, so today we’ll take a look at how they might impact supply this year.

A vast majority of lambs marked in Australia are marked in the July to October period.  Figure 1 shows the MLA/AWI wool and sheepmeat survey results. These indicate that around 70% of lambs are marked in the winter or spring. 

Figure 1 also shows that lamb marking rates are highest in the July to October period. The lambs marked at this time of year drive lamb supply.

The MLA/AWI survey also tells us that 70% of the ewe flock is still made up of Merinos, despite the perceived shift to ‘other’ breeds. For this reason, Merino ewe marking rates still have a large impact on lamb supply.

Overall lamb marking rates jumped in 2014, with October ‘14 rates coming in at 99%, compared to 96-97% for the three previous years. The increase in total marking rates was caused by both Merino and ‘other’ ewes recording increases. Merinos were up to 90% from 87% in 2013, and other ewes were up from 107% to 109% (figure 2). 

Over the past four years, both Merino and other ewes have had similar marking percentages.

Figure 2 also shows total lamb slaughter for the year following the October lambing. For this small sample, there appears to be little correlation between marking rates and subsequent supply. There was, however, a good relationship between ewes joined and total lamb supply for the three years prior to 2015, but this broke down this year.

The improved marking rate across 2014 was only enough to account for an extra 1.4 million head of lambs, which was obviously not nearly enough to make up for the 5 million fewer ewes joined.  However, we still ended up with a similar number of lambs slaughtered.

What does this mean?

With the 41 million breeding ewes that MLA estimate are in Australia, every extra marking percentage point should add around 400,000 head of lambs. This is 1.7% of total lamb supply, so it’s not insignificant.  However, recent history suggests that total lamb supply has more to do with the numbers of ewes joined, and whether growers are rebuilding the flock. 

This doesn’t help in terms of looking at how strong lamb supply will be for the 2015-16 season. However, it is hard to imagine lamb supply being more than 1 million head larger than last year, even with higher marking rates and a poor season which further delays the flock rebuild. 

Over the longer term, improving lamb marking percentages through better management and a drift towards meat breeds will increase lamb supply. Without improvements in demand, this will possibly pressure prices lower.

Mecardo information is provided to assist in your marketing decisions. It contains a range of data and views on the current market. It is not intended to constitute advice for a specific purpose. Before taking any action in relation to information contained within this report, you should seek advice from a qualified professional. The information is obtained from a variety of sources and neither Mecardo nor Ag Concepts Advisory will be held liable for any loss or damage whatsoever that may arise from the use of information or for any error or mis-statement contained in this report. 


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