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A “mountain of supply” – counting numbers in Australia’s livestock market

Australia’s sheep, cattle and goat markets are being impacted by very high production numbers, compounded by already large volumes of meat in congested supply chains, according to agricultural analysts at Rabobank.

For the sheep sector particularly, there is effectively a “mountain of supply at the moment” following two “extremely good seasons” where plentiful rainfall and strong prices had seen a large rebuild of the national flock, RaboResearch associate analyst Edward McGeoch said in a recently released podcast.

This supply is now flooding the market, with near-record volumes of lamb and sheep being ‘turned off’ for slaughter as drier seasonal conditions impact parts of the country. It’s a similar story with goat, where historically high numbers are also hitting the market.

While cattle slaughter numbers have not reached the same near-record highs as sheep and goat, they had tracked 16 per cent up year-on-year for quarter two, RaboResearch senior animal proteins analyst Angus Gidley-Baird said in the podcast “Counting the numbers in the livestock market.”

At the same time, Rabobank said, there are already high inventories of meat in the system, which still need to be cleared from the supply chain.

Two key factors

Two key factors are impacting the livestock markets now, Mr Gidley-Baird said.

“The first is the numbers of livestock that are out there – in particular we think the number of sheep has been underestimated – and what that means in terms of the volumes that we’ve got coming into the market,” he said.

“And the second is the volumes of stock already in the system. A lot of markets – particularly Asian markets – had bought up big through the end of last year and early this year, in the expectation of coming out of Covid and the recovery of food services and increased consumer expenditure.”

Sheep

Rabobank says Australia is estimated to have its largest sheep inventory in almost 20 years in 2023, with expectations of record lamb slaughter this year and higher slaughter weights, while mutton slaughter numbers are also up 68 per cent for the first half of the year.

Cattle

For cattle, Mr Gidley-Baird: “while there’s been an increase in year-on-year cattle slaughter numbers for quarter two, they’re not at those record high levels we’ve seen in sheep meat”.

“Although it’s still a way off where we were in 2018 and 2019, we have had the highest female Q2 slaughter numbers since 2020 (up 26 per cent year on year), which indicates that maybe we’ve moved through the whole herd-rebuild phase and producers are starting to make decisions about how many cattle they want on the ground at the moment,” he said.

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