The Australian sheep and lamb industry has undergone a significant shift during the past five years, moving from rapid destocking to restocking - underpinned by droughts and record rainfalls across the country. These seasonal changes, along with market fluctuations across wool and lamb, has had a significant impact on the composition of lamb offered through AuctionsPlus, as producers seek to adjust their enterprises towards meat-breed and multi-purpose sheep operations.
With the Australian sheep flock experiencing a steadily declining trend since 1990, reaching a low in June 2020 (figure 1) at the depths of the most recent drought, the decisions made by producers around flock characteristics have been magnified, as the rebuild continues into early 2023. 2021 delivered a turn-around in flock numbers, as restocking efforts took priority, yielding a “ideal platform” for sheep producers to expand flocks with different breeds and genetics.
Figure 1: Australian National Sheep Flock and Lamb Slaughter figures 2000-2022 (Source: MLA)
Reviewing AuctionsPlus commercial sheep and lamb breed throughput since 2018, the shift in breed proportions in 2022 indicates the changing demographics of the national sheep flock - with first cross ewe lambs posting the largest change from 8% in 2018, to 12.5% in 2022. This highlights the ongoing emphasis of joining Merino ewe lambs to terminal/other sires, while further reinforcing producers’ goals of breeding for meat, through higher fertility and more productivity (figure 2).
Figure 2: % change in breed proportions from 2018-2022 - AuctionsPlus commercial sheep and lamb listings
On a state-by-state basis, NSW, which accounted for 45% of lamb throughput in 2022, recorded the largest shift in the portion of first cross ewe lambs listed, along with the largest decrease in shedding breed lambs, while Victoria registered Composite and first cross ewe increases. Queensland has seen shedding breed lambs increase significantly across the two periods, while Composite breed lambs and mixed sex Merinos have registered the largest declines. South Australia has seen similar growth to Victoria, with Composite and first cross ewes increasing, while the state also experienced the largest reduction in Merino wether lambs offered.
While 2023 has seen prices across all lamb categories fall from the highs of the previous two seasons, changing demand for certain breeds since 2016 has seen the top six breed listed across AuctionsPlus fluctuate. Merino ewe lambs have stood out as the top performer over the past six years (Figure 3), with average prices rising to a high in Q3 2021, as restocking pressures and demand for younger future breeder ewes was at record highs. With the national flock reaching historical lows in 2020, the steep rise in Merino ewe lamb prices was unsurprising, as the purchasing of young ewes was an effective method to rebuild stock numbers quickly. Merino wether lambs registered the second largest price hike on an index basis between 2016-2022, while shedding breed lambs followed a similar price trajectory on relative terms.
Figure 3: AuctionsPlus lamb category average prices on a quarterly basis with Q1, 2016 indexed (100).
With lambs still being offloaded after the disruptions in late 2022, it is expected that the first quarter of 2023 will see prices continue to remain subdued. Another thing to watch in 2023 will be the trend of first cross ewe proportions. If the market cycles back to where it was in 2018, will we see a reduction in Merinos joined to terminal sires? Or are the current breed proportion trends going to remain heading forward?