By Andrew Woods | Source: BOM, BAE, AWC, AWEX, ICS
After the recent run of dry seasons, rainfall this season has been generally good. This article takes a look at where we have been in terms of rainfall and how the different regions around Australia are travelling at present.
Figure 1 shows the variation in rainfall rank for financial years from 1904-5 through to 2015-16. The rainfall has been averaged across the different regions according to sheep numbers, with the variation shown based on the median rainfall rank for the period 1905-2016. The past three years have been 1 to 1.5 deciles below the median, so on average across all regions they have been dry by the standards of the past century. We had a brief respite in 2011-2013, following the torrid 2002-2010 period.
Recent work developing longer term rainfall records suggest that the past century, in particular the second half of the 20th century, may not be a good guide to future rainfall. If you look at Figure 1 the rainfall between the late 1940s and late 1970s does seem to be skewed to positive variations. Figure 1 shows us that median or better rainfall in the coming year would be a substantial improvement on recent years.
Figure 2 shows rainfall ranks for June and the three months to June by region, starting in northern Queensland and working around Australia to south west Western Australia. The height of the bars (which shows the 3 months rainfall rank) tells the story – it has been wet in most regions. South West Victoria has only had median rainfall, while the Western Australian regions had a good start and on the 6 months ranks are doing very well.
As usual spring rainfall will be key in the southern regions to how the season plays out. However at this stage the rolling 12 month rainfall rank is the best it has been in two years, so the season is in a good position.
The sheep offtake has fallen in recent months. When converted to annual sales, sheep sales have fallen to flock build up levels. The lamb offtake is steadying around 33%. During the past couple of wet periods when the flock size steadied or grew, the lamb offtake dipped so we have a good chance of see lamb numbers sold in the spring ease slightly given median rainfall or better in the next few months. That would be positive for both lamb and mutton prices.
Wool wise it is early yet to make any calls about changes in the clip. However the dry seasons of recent years have maintained fine wool production at relatively high levels. The combination of four years of depressed fine wool premiums and good seasonal conditions in the spring would see fine wool production fall substantially in the second half of the 2016-17 season. A consequence of this would be a widening of the micron premiums and discounts from their extremely narrow levels.
The dry seasons of recent years have seen persistently high fine wool production and a persistently high sheep offtake. Continued rainfall in the spring would see these trends reversed, which would allow fine wool premiums to start a recovery in 2017 and allow the flock to increase. Lower lamb and sheep sales to abattoirs would help sheep meat prices.
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