SALEYARD prices for sheep meat will skyrocket in the 2019/20 financial year despite a decrease in volume and value, a national report has predicted.
This comes after a bumper season earlier in the year which saw lamb prices across the South East peak with a staggering $337 at the Naracoorte Regional Livestock Exchange in June.
According to the forecast report released from Australian Bureau of Agricultural and Resource Economics (ABARES) this week, prices will increase by 12pc to 810c/kg for an average lamb.
High sheep turn-off in the past year reduced the number of lambs through the nation’s saleyards, in turn pushing the price to historical highs.
ABARES predicts a combination of falling Australian lamb production and strong export demand will see these numbers continue to climb.
In addition, the 2018/19 sheep flock was estimated to have fallen to its lowest level since 1904/05 due to prolonged drought conditions and a longer-term trend in land use towards cropping according to the bureau.
The report predicts primary producers will look to build their flocks after the sharp decline if conditions are favourable, but the high cost of restocker animals, a small breeding flock and a dry spring could hinder expansion.
Although sheep meat export is predicted to fall due to lower production, the proportion of meat for export is expected to continue to increase due to high demand in all major export markets.
Australia’s biggest competitor in the sheep meat export market – New Zealand – is also expected to drop its production.
As both countries account for the majority of global export, this will place pressure on prices with Australian export values forecast to fall by much less than export volumes.
While signs are positive for sheep meat, Australian farming production value is set to drop to a low not seen since the millennium drought.
The bureau is predicting farm production could be worth as little as $59b for the 2019/20 season, with the US-China trade tensions putting a large strain on the industry.
Sharp falls are forecast for livestock and summer crops while winter crops will see an increase, but still remain low.
In addition to the “trade war” between the US and China, strong competition in export markets and ongoing drought are taking their toll on the industry, but some sectors will see promising increase in price and value.
Major commodity exports such as wine, canola and rock lobster are predicted to increase in volume, price and value according to the report, with the South East expected to benefit.