The Sheep Turnoff Ratio (STR), a key metric in monitoring the national flock cycle of rebuild and liquidation phases, has now firmly signalled that Australia’s sheep industry has shifted into a liquidation phase.
As of the end of Q1 2025, the STR stands at 15.9%, and the year-to-date average for 2025 sits only marginally lower at 15.8%. These levels are above the long-held benchmark of 14%, above which the national flock historically begins to contract. The continued rise in turnoff, evident through increased slaughter (but not elevated live export volumes), confirms that the trend seen in the latter half of 2024 has intensified into the new year.
A recently updated scatter plot chart tracking the relationship between the annual STR and year-on-year flock change from 2003 to 2024 further reinforces this conclusion. The chart plots historical STR values against actual changes in flock size and reveals a clear negative correlation (R² = 0.7691). The newly included 2025 forecast point, highlighted in teal, shows the STR firmly in liquidation territory. When fitted to the historical trendline, the 2025 STR of 15.8% corresponds to a projected national flock contraction in the range of about 3-4%.
Despite this, Meat & Livestock Australia (MLA) continues to forecast a 7.5% drop in the national flock for 2025, a figure that sits on the higher end of what historical patterns would suggest given the current STR. The scatter plot implies that while a contraction is indeed expected, the magnitude of the decline might be slightly less severe than MLA's top-end estimate, unless turnoff rates increase further over coming quarters or lambing rates underperform expectations.
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Western Australia remains a key contributor to this shift, with ongoing destocking driven in part by uncertainty surrounding the federal government’s planned phase-out of live sheep exports by 2028. Combined with challenging seasonal conditions in parts of the country and weaker restocker sentiment, particularly for ewes, these structural and economic pressures are accelerating the pace of liquidation.
The sustained elevation in the STR now rules out any flock expansion in the near term. Instead, the industry is bracing for a tighter national flock through 2025 which has been particularly evident in recent sheep and lamb price gains and very favourable winter over-the-hooks grids being offered by the nation’s processors. Should seasonal conditions stabilise and market confidence return later in the year, the STR may ease slightly, but the Q1 data suggests liquidation is firmly underway.
Australia’s sheep industry has entered 2025 in clear contraction. The elevated STR confirms a nationwide shift in flock dynamics, and while MLA’s forecast of a 7.5% drop remains within the plausible range, it may represent the upper bound of historical expectations based on past STR behaviour.