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Tuesday, September 05, 2017

Record low for Ewe numbers but not the flock.

By Angus Brown  |  Source: ABS, ACA

Key points

  • The national sheep flock is still higher than 2010 lows, but the ewe flock is at new depths.
  • At June 2016 there were more lambs, which is likely to boost the ewe flock this year.
  • The weaker ewe flock adds weight to forecasts of tighter lamb supply this year, and increases in coming years.

2017-09-05 Sheep Fig 1

2017-09-05 Sheep Fig 2

2017-09-05 Sheep Fig 3

Last week we published some numbers from the ICS flock forecast model, with the conclusion being that the flock is largely tracking sideways. This week we try to draw some conclusions from the Australian Bureau of Statistics (ABS) Agricultural Census data, with the most interesting number being a record low ewe flock.

As outlined in last week’s flock forecast article the ABS have changed their flock estimates to include only businesses with “Estimated Value of Agricultural Operations” (EVAO) over $40,000.  The previous number was $5,000, and as such a large number of hobby and small operators have had their sheep excluded from the flock. 

The difference this made was to decrease the total flock by 4%.  For the ewe flock it took out around 3%. Given these numbers we’ve made some alterations to historical numbers to reflect the new EVAO.

Figure 1 shows that while the Australian sheep flock fell in the year to June 2016, with the 67.54 million head being down 0.7% on the previous year, when it is adjusted.  The flock hasn’t quite reached the lows of 2010, with the current flock still sitting 3.4% above the depths of 2010.

While the total flock didn’t reach a new low, the ewe flock did.  The Australian Ewe flock fell 2.5% in the year to June 2016 to 37.2 million head.  The ewe flock now sits 9.2% lower than the 2010 level (figure 2) with the decline largely in the Merino Ewe flock.  There were 3% fewer Merino Ewes in the flock than a year earlier, while other ewes also fell, but just by 1.7%.  

So if the Ewe flock is 9.2% lower than in 2010, yet the total flock is 3.4% larger, there must have been be a lot more ‘other’ sheep out there in June 2016.  Sheep other than ewes are made up of lambs, wether and rams, with the majority lambs.  The historical data doesn’t split the lambs from the wethers, but it’s safe to say that the 5.7 million head difference from 2010 to 2016 was largely made up of lambs. 

Some of these lambs will have been slaughtered, with 2017 slaughter expected to be 3.5 million head higher than in 2010-11.  The remainder are likely to be added to the ewe and wether flock next year.

What does this mean?

The weaker ewe flock in 2016 adds some weight to the forecast of tighter lamb supply in 2017, but we can see that in the past the ewe flock has managed to grow relatively quickly.  Retention of lambs over the last 12 months is likely to see some growth in the ewe flock this year, and going forward, which will eventually add supply to lamb and sheep markets.

Obviously pressure will come on prices with increased supply, but the good news is that the ewe flock coming from such a low base will limit how quickly sheep and lamb supply can grow.

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