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Mecardo / MLA presentation: What will drive Australian sheep and lamb prices? - 28/7/15

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Visit http://offers.mecardo.com.au/sheepmeat-market-outlook-webinar-july-2015-recording-1 to watch a recording of the webinar.

Lamb and sheep markets have weathered the dry conditions of the last two years well compared to cattle, but haven’t seen the surge in prices we’ve seen for cattle recently.
Will lamb prices continue to face headwinds? Importantly, what prices can we budget on for the coming years?

In this webinar, held on 28 July 2015, Meat & Livestock Australia's (MLA's) Market Information Manager, Ben Thomas, presents the latest update for MLA's sheepmeat industry projections. Mecardo analyst, Angus Brown, then analyses what this update means for the outlook for sheep and lamb prices going forwards.

Mecardo provides independent analysis of cattle, sheep, wool and grain markets. Mecardo joins forces with MLA to offer the very latest insight into sheepmeat markets.

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Mecardo / MLA presentation: What will drive Australian sheep and lamb prices? - 28/7/15

  1. 1. What will drive sheep and lamb prices? 28 July 2015 Presented by: Ben Thomas, MLA & Angus Brown, Ag Concepts Unlimited / Mecardo TO ACCESS THE AUDIO: You may listen to the webinar using your computer speakers. Alternatively (or if you have any quality or other issues): 1. Dial 1800 896 323 on your phone 2. Enter participant code = 55153077
  2. 2. Some housekeeping » 15 minutes Q&A at the end » Use Chat Box (bottom left, near cog) to lodge a question anytime during webinar » Short survey at end » For any technical issues: – Dial to speak to Redback Conferencing • *0 • 02 8014 5150
  3. 3. July sheep & lamb projections Ben Thomas
  4. 4. Disclaimer Care is taken to ensure the accuracy of the information contained in this publication. However MLA cannot accept responsibility for the accuracy or completeness of the information or opinions contained in the publication. You should make your own enquiries before making decisions concerning your interests. MLA accepts no liability for any losses incurred if you rely solely on this publication. Information contained in this publication is obtained from a variety of third party sources. To the best of MLA’s knowledge the information accurately depicts existing and likely future market demand. However, MLA has not verified all third party information, and forecasts and projections are imprecise and subject to a high degree of uncertainty. MLA makes no representations and to the extent permitted by law excludes all warranties in relation to the information contained in this publication. MLA is not liable to you or to any third party for any losses, costs or expenses, including any direct, indirect, incidental, consequential, special or exemplary damages or lost profit, resulting from any use or misuse of the information contained in this publication. Care is taken to ensure the accuracy of the information contained in this publication. However MLA cannot accept responsibility for the accuracy or completeness of the information or opinions contained in the publication. This information is not medical advice and you should consult a health professional before making any decisions concerning your interests.
  5. 5. About MLA Meat and Livestock Australia Ltd (MLA) strives to be the recognised leader in delivering world class research, development and marketing outcomes that benefit Australian cattle, sheep and goat producers. Working in collaboration with the Australian Government and wider red meat industry, MLA's mission is to deliver value to levy payers by investing in initiatives that contribute to producer profitability, sustainability and global competitiveness. MLA is a producer owned, not-for-profit organisation and not an industry representative body.
  6. 6. MLA Membership
  7. 7. Industry structure
  8. 8. MLA does not collect or set the levy Producer levy
  9. 9. Levy allocation summary
  10. 10. Small improvement in rainfall in NSW
  11. 11. Some year-on-year comparisons According to ABS data, after 5 months in 2014... • Lamb slaughter was 9.12 million head • Mutton slaughter was 4.5 million head Nationally, we went on to kill • 22.25 million lambs • 10.1 million sheep Where are we up to this year… • Lambs at 9.6 million head – up 5% • Sheep slaughter at 3.6 million head – down 21%
  12. 12. Monthly lamb slaughter Source: ABS J F M A M J J A S O N D 0 500 1000 1500 2000 2500 '000 head 2013 2014 2015
  13. 13. Historically high lamb turn-off to continue Source: ABS, MLA forecasts 96 98 01 02 04 06 08 10 12 14 16f 18f 0 5 10 15 20 25 million head f = forecast
  14. 14. Lamb production tipped to be a record Source: ABS, MLA forecasts 91 93 95 97 99 01 03 05 07 09 11 13 15f 17f 19f 0 100 200 300 400 500 600 '000 tonnes cwt 15 17 19 21 23 25 kg/headproduction carcase weight f = forecast
  15. 15. Mutton slaughter to stay lower year-on-year Source: ABS, MLA forecasts 96 98 01 02 04 06 08 10 12 14 16f 18f 0 5 10 15 20 million head e = estimate, f = forecast
  16. 16. National turn-off to continue growing Source: ABS, MLA forecasts 91 93 95 97 98 01 03 05 07 09 11 13 15f 17f 19f 31 March until 1999, 30 June from 2000 0 50 100 150 million head 20 25 30 35 40 45 50 % turn-offflock turn-off as% of flock f = forecast
  17. 17. Lamb exports forecast to be a record Source: DA, MLA forecasts 95 97 99 01 03 05 07 09 11 13 15f 17f 19f 0 50 100 150 200 250 300 '000 tonnes swt 0 10 20 30 40 50 60 % exported Exports(LHS) % production exported (RHS) f = forecast
  18. 18. Lamb export unit values creeping higher Source: GTA 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 0 2 4 6 8 10 12 A$/kg US China UAE World
  19. 19. China – largest producer and consumer
  20. 20. NZ slaughter and production steady Source: Statistics New Zealand J F M A M J J A S O N D 0 500 1000 1500 2000 2500 3000 3500 '000 head 2013 2014 2015
  21. 21. National saleyard lamb prices…stay above $5? Source: MLA'sNLRS 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 0 100 200 300 400 500 600 700 A¢/kg cwt Light lamb Trade lamb Heavy
  22. 22. Conclusion • Lamb slaughter to reach 22.25 million head • Lamb production to reach 492,000 tonnes cwt • Record lamb exports – 250,000 tonnes swt • Lamb prices to reduce seasonally, but remain strong?
  23. 23. MLA daily indicators – nlrs@mla.com.au
  24. 24. 2015 lamb supply exceeds all expectations – but fall still expected in ‘16 and ‘17 15,000 16,000 17,000 18,000 19,000 20,000 21,000 22,000 23,000 24,000 '000 head Actual MLA Estimates Source: ABS, MLA estimates Figure 1. Lamb slaughter and forecasts
  25. 25. Lamb slaughter as % of flock to reach record 40 50 60 70 80 90 100 110 10% 15% 20% 25% 30% 35% Flock (rhs) Lamb slaughter % of flock Source: ABS, MLA estimates Figure 2. Flock size and lamb turnoff Lamb % of flock million head
  26. 26. Supply vs price equals demand 0 100 200 300 400 500 600 1.20 1.40 1.60 1.80 2.00 Averageprice¢/kgcwt Average monthly slaughter (million head) Figure 3. Lamb Demand curves 00/01 to 03/04 03/04 to 07/08 08/09 to 12/13 2013/14 2014/15-2018/19f Source: ABS, MLA, ACU
  27. 27. Price forecast based on supply projections – assuming steady demand…. 150 250 350 450 550 650 13000 15000 17000 19000 21000 23000 ¢/kg cwt'000 head ESTLI Source: ABS, MLA, ABARES, ACU Bars = slaughter (LHS) Figure 4. Lamb slaughter and prospective prices
  28. 28. Within season variation – average +/-12% 350 400 450 500 550 600 650 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun ¢/kg cwt 5-yr av. 2015/16 2014/15 2013/14 Source: MLA's NLRS Figure 5. Eastern States Trade Lamb Indicator
  29. 29. Mutton slaughter down – but not to 2010-2012 levels 60 65 70 75 80 85 90 95 100 105 2 4 6 8 10 12 14 16 18 20 Live Exports (lhs) Slaughterings (lhs) Flock (rhs) Source: ABS, MLA estimates Figure 6. Sheep turnoff , flock size and forecasts million head million head
  30. 30. Mutton supply depends more on weather 0 50 100 150 200 250 300 350 400 450 0.0 2.5 5.0 7.5 10.0 12.5 15.0 17.5 20.0 Averageprice¢/kgcwt Total annual slaughter (million head) Figure 7. Sheep supply vs price 2000-02 2003-11 2012-13 2014-15 2016 Source: ABS, MLA, NLRS 2016 projection - wet 2016 projection - median r'fall 2016 projection - dry
  31. 31. Spread to ESTLI low – demand lower? -350.00 -300.00 -250.00 -200.00 -150.00 -100.00 -50.00 0.00 2007 2009 2011 2013 2015 ¢/kg cwt Spread Figure 8. ESTLI & national mutton indicator Source: MLA's NLRS
  32. 32. Something to think about? -200.00 -100.00 - 100.00 200.00 300.00 400.00 500.00 600.00 700.00 800.00 Figure 9. ESTLI and EYCI ESTLI EYCI Spread
  33. 33. Take home messages » Lamb and mutton markets are supply driven » The shift to lamb production is maintaining supply despite falling flock » Mutton supply will be impacted more by season than lamb » Significantly higher lamb and mutton prices may require improved export demand » Can better cattle prices drag lamb higher?
  34. 34. More information & Survey » More info - Jenianne Hall: – jhall@mecardo.com.au, 0438 624 154 » Non-Mecardo subscribers will receive one month of Mecardo Premium for free

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