MLA’s latest SPIS report, direct from producers indicates the significant influence larger sheep producers have on the overall outcomes of the flock.
The report, much like the same one from October 2023, suggests that big numbers of lambs in the first half of next year should be expected to be marketed and sold.
2024 mutton slaughter is on track to reach its highest level since 2006, passing 11.9 million head.
In late November, MLA released the October wave of their Sheep Producer Intentions Survey (SPIS), full report here, which specifically examines the 2024 lamb crop numbers, producer sentiment, sales decisions and other key metrics of the sectors operations, direct from the producers themselves.
The numbers from this report and the stories it tells are an important contributor to better understanding the lay of the land for the sector and in particular, lamb sales. It’s a report I follow closely.
The headlines from the October wave are;
1. 46% of the total 2024 lamb crop or 10.3 million head are forecast to be sold between January & June 2025.
Suggesting a repeat of H1 2024, where lamb kills were inflated relative to the second half of this year, could be in order again in 2025.
2. 63% of the flock sits with producers that have 3,000 sheep or more.
Demonstrating that these larger operators have significant sway in determining the outcomes of the flock’s sales program and changes in numbers.
3. 40% of producers expect their lamb crop to be larger in 2025, with 44% of producers indicating that they expect better lambing results to drive this.
Importantly, producers with 10,000 head or more of sheep expect to see an increase over 270,000 lambs in 2025 – further highlighting the influence larger producers have on the overall flock change.
The SPIS survey has an array of really valuable insights, I have selected 3 figures (from several) to build my case for why I expect lamb slaughter volumes to similarly mimic H1 2024. Analysts and market watchers do this to craft and tell their story and the SPIS data further supports my belief of these higher lamb kills next year.
In the October 2023 SPIS report, Australia’s sheep producers forecast they’d sell 10.3 million lambs or 49% of the total 2023 lamb crop in the first half of 2024. A dry spring for many sheep regions and prices at 10-year lows drove the retention of lambs (where possible) to sell in the new year.
It is looking increasingly likely the same scenario will play out in the first half of 2025. With drier conditions in the south forcing retention of lambs due to a lack of weight and a strong trading opportunity considering the discount of restocker to trade & heavy lambs encouraging lambs to be purchased and grown out over summer.
Figure 1 below shows how elevated H1 2024 lamb slaughter levels were, with Q2 2024 lamb slaughter reaching record highs at 7.014 million head.
Figure 1. 2024 quarterly lamb slaughter vs three-year and 10-year averages.
The October 2024 SPIS data, with producers expecting to see 10.3 million lambs sold in the first half of 2025, is very much the same as the 2023 report. Higher lamb supplies next year should be expected because of this.
With lambs held over summer in 2023/24, the market saw prices reach their 2024 lows in March, with higher supplies a contributing factor to this.
The first half of 2025 may see a similar dynamic play out for the same reasons, something producers must be mindful of. Weight gain will be an important offset or “hedge” for lamb producers or traders to extract value from the trade if markets become pressured by higher supply.
Much has been written about the performance of both the mutton kill and subsequently exports this year. And rightly so, the continued outperformance of the sheep meat supply and therefore processor throughput has been record breaking when coupled with lamb kill numbers.
In 2024, based on current trajectory, I expect the 2024 mutton kill to surpass 11.9 million head and reach its highest level since 2006.
On a quarterly basis, Q4 2024 is on track to see the most number of sheep processed in Australia since Q1 2003 at 3.60 million head. This outcome would see Q4 2024’s quarterly sheep slaughter figure 96% or 1.7 million head higher than the 10-year quarterly average.
If the 2024 full year results are realised, this would represent a total sheep slaughter increase of more than 22% or 2.1 million sheep year on year compared to 2023.
The results are further validation of the size of the sheep flock in Australia this year, highlighting that Meat & Livestock Australia’s flock size forecasts are accurate. To have a mutton kill so high, certainly in the modern flock era (post 2007) further reiterates the sheep flock is bigger than some other analysts and commentators are suggesting, otherwise a kill this big wouldn’t be possible.
Furthermore, expect Q4 mutton production to reach its highest quarterly level since Q1 2001, it may even surpass this, dependent on sheep carcase weights for the quarter.
Ripley Atkinson's experience in the red meat industry and current role at StoneX developing price risk management tools for Australia’s sheep and cattle sectors ensures he delivers unique, whole of supply chain insights and analysis across key factors such as prices, supply, production and the drivers of the sheep and cattle cycles.
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