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Thursday, June 25, 2015

Merino share of lamb slaughter increasing, with intentions to increase further

By Angus Brown  |  Source: MLA, AWI

Key points

  • The MLA-AWI sheep supply survey is conducted every four months, and produces a range of data.
  • There appears to be a trend towards slaughtering more merino lambs, especially in Victoria.
  • Strong wool prices could see lamb supply ease when combined with a good season.

2015-06-25 Lamb Survey FIG 1

2015-06-25 Lamb Survey FIG 2

2015-06-25 Lamb Survey FIG 3

Every four months, Meat and Livestock Australia and Australian Wool Innovation survey sheep producers regarding their sheep production and their intentions for the coming four months. While the number of respondents vary, and some of the results can be misleading, there are some trends we can identify that have impacted markets.

There is plenty of data produced in the MLA-AWI survey, including ewes joined, lambs marked, and wether and lamb selling intentions, all broken down by state.  One interesting trend has been the increase in Merino lambs that are intended to be sold for slaughter.

Figure 1 shows the lamb sales intentions per respondent over the last four years.  Interestingly, the average operation size of respondents is large compared to the ‘average’ sheep and lamb operation. Lamb turnoff per respondent ranges between 3,000 head and 6,500, depending on the season.

The number of Merino lambs intended to be sold for slaughter has risen 9% from the Jun-11 to Feb-12 period through to Jun-14 to Feb-15. This increase has compensated somewhat for the 18% fall in ‘other’ lamb slaughter intentions over the same period. 

The fall in ‘other’ lamb slaughter intentions highlights some of the issues with the survey data, as 2014-15 is likely to be a record slaughter year.  Intentions can change, however, and this may have something to do with the discrepancy. It is possible that the season has led to more lambs being sold than initially intended.

Contrary to what you would think, the big Merino states of NSW and South Australia did not increase their Merino slaughter intentions, with their share of Merinos relatively steady. Rather, Victoria (figure 2), the state with the largest proportion of meat sheep, was where growers indicated their intention to slaughter more Merinos.

Looking at longer term sheep producer intentions, there has been a general trend over the last four years of producers intending to increase slaughter lamb turnoff.  Figure 3 shows the proportion of respondents who are intending to increase, maintain or decrease slaughter lamb turnoff. 

In general, 40-45% of respondents intend to increase slaughter lamb turnoff, while only 10-15% intend to decrease turnoff.  This would suggest rapidly growing slaughter lamb supply. However, it probably has more to do with the type of producers who respond to the survey, and overestimates the proportion who intend to increase turnoff.

What does this mean?

While the data from the MLA-AWI survey may not be totally reliable, it does seem to fit with some of the anecdotal trends we are seeing. The next survey is being conducted now. It will be interesting to see if Merino lamb slaughter intentions fall because of the good recent rain and improved wool prices. These factors may encourage more growers to hold onto Merinos.  This could weaken total lamb supply over the coming year. However, the general intention to increase slaughter lamb turnoff should limit falls in lamb supply, with much depending on marking rates. We will have a look at this next week.

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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