After a couple of years of successful flock rebuilding in Australia, consistent growth in the lamb crop has reached a point where it is now spilling over into higher slaughter rates.
Earlier this year, Meat and Livestock Australia forecast that lamb slaughter rates would increase by 1.35 million head on 2021 levels to 21.6m head.
It was expected that higher slaughter rates would appear early in the year and remain consistently higher than last year to absorb these extra lambs.
However, these expected slaughter rates haven’t exactly come to fruition with covid-related processing disruptions causing kill rates to fluctuate either side of five-year average trends.
Favourable seasonal conditions have kept lambs on farm for longer, which has also hamstrung processing rates.
A key indicator of this has been a record lamb carcase weight for the first quarter of this year, coming in at a hefty 25kg.
Recent analysis suggests that Australian lamb slaughter will need to at least match if not exceed last year and the five-year average processing rate over the remainder of the year to get anywhere close to the target of 21.6m head.
And these higher supplies are not a one off.
Forecasts peg further upside to the Australian lamb crop and therefore production for at least the next two years.
May lamb slaughter tallies finally showed some promise of aligning with these earlier forecasts.
Weekly kill rates ranged between 337,000-351,000 head.
Unfortunately, the spike in supplies has pressured prices, with current trade lamb prices well under last year’s levels.
The concern is that if forecast slaughter rates for the year are correct, then there is still a large wave of lambs to process.
Processing rates generally drop to align with winter production from early June.
However, given the sheer volume of lamb that has come out through May it does suggest there is a backlog of lambs that need to be processed sooner rather than later.
It may be that processors will need to continue to offer increased availability to work through these numbers.
Unfortunately, this could mean further pricing pressure.
While domestic consumption will absorb a percentage of these higher supplies, inevitably it will also lead to larger export volumes.
All indications point to a solid performance for Australian exports this year.
Export values hit record levels in March, reflecting the strong demand.
New Zealand and Australia share a number of common markets for lamb and exporters here will need to be prepared that Australia is set to have an even larger presence on the export scene.
And that is likely to become more visible sooner rather than later, especially if Australia’s lamb production remains elevated through the winter months.
This article was written by AgriHQ analyst Mel Croad. Mel’s reports provide key insights into what makes our sheep and beef markets tick. Subscribe to AgriHQ reports here.