Queensland riding on the Sheep’s back

The sheep and wool industry was for many decades, the backbone of the Australian economy; breathing life and prosperity into rural communities. Throughout the 1970’s and 1980’s, Australia’s sheep population was well over 100 million head and rural grazing areas bustled with jackaroos, contractors, scanners, shearing teams and governesses. This all changed dramatically when it came crashing down in the 90’s, a result of the wool reserve price scheme collapsing due to a massive oversupply in the market, forcing the industry to crumble around it.

Following the collapse, the industry struggled to recover for most of the 2000’s. Many Queensland growers destocked or walked away from sheep and wool entirely due to poor commodity prices, prolonged dry seasons and stock losses due to wild dogs. However, in recent years there has been a return of strong sheep and wool prices, leading to traditional sheep grazing areas of Queensland reverting to their roots.

The AuctionsPlus Market Insights team have looked at historical data for Merino ewes and wethers purchased and listed in Queensland to assess what is driving decisions. While historical rainfall data sourced from the Bureau of Meteorology highlights the dependency rainfall has on supply and demand in Queensland.

As shown in Figure 2, Queensland purchases were considerably lower in 2013 and 2014, whilst listings were at an all-time high, suggesting that growers were destocking due to low rainfall and poor returns being received. Purchases increased dramatically during 2015 following late rainfall in key sheep grazing areas such as St George. Purchases steadied in 2016 and listings dramatically reduced as a result of producers rebuilding their flock. Lower than average rainfall in recent years has resulted in increased listings, although interestingly, purchases have also risen. The other component is the construction of exclusion fencing in grazing regions.

Exclusion fencing has proved to be a game changer in many regional areas, enabling producers to fence out unwanted predators and sustain feed and ground cover for longer. In the last few years, exclusion fences have been a critical contributor to flock numbers increasing in parts of Queensland; a variety of government schemes have granted producers in regional areas access to low interest rate loans to this infrastructure.

Tim Salter, Elders Longreach estimated that roughly 30% of the Longreach district is now fenced allowing for producers to get back into Merino sheep. Shown in Figure 4, Longreach, a once renowned sheep area, have recently been purchasing large numbers of Merinos off AuctionsPlus, and this has been a direct result of the fences. Tim stated that “purchasing and listings are dependent on rain-based demand, and even with exclusion fencing, producers still need feed”.

Looking forward, producers are open to do whatever is required to return a profit, be it trading wethers or rebuilding flocks for wool and fat lambs. Tom Boyle from TopX Longreach, said “In 2017, local growers watched the exclusion fences in NSW closely to monitor how they would perform. Throughout 2018 and 2019 after seeing the results through northern NSW and with the sheep market kicking it enticed a lot of producers in”.

Positivity around the industry is strong, as Tim Salter stated “this recent rain, coupled with the fencing has been a real game changer” returning much needed confidence back into the once traditional sheep grazing areas of Australia.