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Lamb prices forecast to rise in 2014 - 2015

Saleyard lamb prices are forecast to rise in 2014–15 on the back of tightening lamb supply and growing export demand.  Beyond 2014–15 saleyard lamb prices are projected to rise further in real terms, reflecting growth in export demand. This is according to ABARE’s March 2014 report.

Sheep meat and wool

Outlook to 2018–19
by Robert Leith

  • The sheep flock is forecast to fall to 71.8 million head by June 2014 before rebuilding to 75 million head by the end of 2018–19.
  • Saleyard lamb prices are forecast to rise in 2014–15 on the back of tightening lamb supply and growing export demand.
  • The Australian Eastern Market Indicator (EMI) price of wool is projected to increase to around 1155 cents a kilogram in 2015–16 (in 2013–14 dollars), before declining slightly toward 2018–19.
     

Lamb prices to rise in the short term

Despite dry conditions and increased lamb offerings in the eastern states, saleyard lamb prices have remained considerably higher year-on-year throughout summer, supported by high processor demand flowing from strong export demand. Nationally, lamb prices averaged around 400 cents a kilogram between November and January 2013–14, up from around 330 cents a kilogram in the same period in 2012–13.

Lamb availability is expected to tighten during the remainder of the financial year, putting upward pressure on prices. The saleyard price of lamb is forecast to average 445 cents a kilogram for 2013–14 as a whole, a 15 per cent increase from 2012–13.

The Australian weighted average saleyard price for lamb is forecast to increase by 8 per cent in 2014–15 to average 480 cents a kilogram, reflecting further tightening in the supply of Australian lambs for slaughter. An assumed depreciation of the Australian dollar will improve Australian lamb’s competitiveness in export markets.

Beyond 2014–15 saleyard lamb prices are projected to rise further in real terms, reflecting growth in export demand. Stronger economic growth in the Middle East is expected to boost demand for higher value cuts of lamb in 2015–16 and 2016–17, placing upward pressure on world prices. Lamb demand in China is also expected to grow but at a slower rate than in the past two years. Toward the end of the projection period, lamb prices are expected to ease in real  terms as lamb slaughter increases.

The average saleyard lamb price is projected to be around 469 cents a kilogram (in 2013–14 dollars) by 2018–19.

Extract from  ABARES 2014, Agricultural Commodities: March Quarter2014. CC BY 3.0.

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