Sheep prices have surged – Farmland Investment

The poor conditions that marred 2018 have had a significant impact on sheep meat supply in 2019, with lamb slaughter at its lowest since 2012.  Dry conditions, which have led to substantial drops in marking rates and the extensive culling of ewes and ewe lambs, has led to a decline in lamb slaughter in 2019.  In the year ahead, many producers will be hoping for some consistent rainfall to help alleviate the pressures associated with high feed costs.  Unfortunately, as already mentioned, the current Bureau of Meteorology (BOM) three-month outlook does not point to a considerable turnaround in seasonal conditions.  Considering the substantial moisture deficiencies apparent in many regions, any improvement in conditions would require consistent ‘above-average’ rainfall over the coming months.  As a result, sheep slaughter is forecast to remain near long-term averages at 8 million head, but back from the large numbers processed in 2018.  Both sheep and lamb carcase weights were impacted by the tough conditions and high cost of feed in 2018.  This is expected to continue in 2019 with feedstocks depleted and feed demand to remain high until conditions improve.  The national flock is estimated to have declined by over 4 million head, or 6.1%, due to the drought and is forecast to experience a further decline of 3.7% by the end of 2019 as many producers are forced to continue destocking as they wait for a turnaround in the weather.  Longer term, high prices across both sheep meat and wool provide a strong incentive for producers to rebuild their heavily depleted breeding flocks once conditions allow.  Fortunately, robust international demand and a low Australian dollar continues to support Australian exports and, in turn, domestic saleyard prices.  Records have been broken again and again as markets around the world compete strongly for Australia’s high quality sheep meat. The conditions driving strong prices for well-finished stock last year look likely to remain in place in 2019, particularly whilst conditions remain dry

Paringa Farming has a strong exposure to sheep with all four of our tenants having large sheep flocks.

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