MLA Forecasts

Released in February the Meat and Livestock Association's forecasts make pleasant reading for sheep producers. With global lamb supplies tight the price outlook, at least for the first half of 2011, remains good. Prices in 2010 were 14% up on 2009 and the first cross ewe price in 2011 almost reached $360! With wool and skin prices also improving it bodes well for this year and is an opportunity to put some cash away in reserve.

Chart from "Weekly Times" Dec 23 2010

The Australian flock size will increase from the 67.7 million head in June 2010, probably to a touch over 69 million. The breeding ewe flock in June 2010 was 41.3 million so it has been the wool producing wethers that have declined most. This will be the first time since the 1990s where the flock size has been rebuilding.

For us the decision was whether to buy FX ewe lambs and hold for a year or to buy some Merino ewes and produce our own lambs. A difficult choice given the prices but we were lucky enough to source some good Merinos locally at the right price. It means that our sale in November will only be Border Leicester flock rams but it was the right choice.

The problem with high prices is that they will fall. Butchers and lamb processors are almost break even on a $230 lamb so if they are paying more it is because they are (super) heavyweight stock. We don't buy lamb from the supermarkets but the prices are extraordinary. It all feels to me like the prices are maxing out.
As an aside the market dominance of Coles and Woolworths is a major concern as they drive down for eggs, milk and other foods. As they are profit driven they don't care if they put producers to the wall as they will simply import the foodstuffs from overseas producers like Chile.

Time for some diversity (garlic, studio art glass and so on) and to stick with the best option for our local conditions - Border Leicesters and Merinos.