Australia-Lamb production will rise in 2009.
AUSTRALIA-LAMB production is tipped to rise 4.4 per cent, despite the ongoing decline in the national flock.
Meat and Livestock Australia, in its 2009 projections released today, is tipping lamb slaughterings will be up 1.9 per cent to 20.7 million - only 400,000 head short of the record 21.1 million of 2007.
MLA sheepmeat analyst Kara Jones said MLA’s optimism was based on preliminary ABS data indicating that ewe numbers rose by 186,000 head last year to 46..2 million.
The ABS data defies the reports from saleyards, processors and breeders of terminal rams that ewe numbers were continuing to decline.
Ms Jones said though the prime lamb component of the national flock was expanding, the overall national flock was still expected to decline another four million this year to 75.3 million, due largely to the displacement of wethers for cropping, the persistent drought and the despressed wool prices.
But despite the ABS data, MLA was predicting a continuation of strong lamb prices and an improved profitability for prime lamb sector.
Meanwhile, lower input costs, a weaker Australian dollar, better seasonal conditions and resilient export demand will allow the Australian cattle industry to rebuild returns this year, according to MLA.
But MLA economist Tim McRae said unprecedented volatility in financial, currency and commodity markets and the worsening global economic situation made the "crystal ball foggier than ever".
MLA said while many northern cattle producers are in a position to benefit from any rise in prices, those who have been in severe drought for years, principally in southern states, will face another difficult year, even if the drought recedes.
"The turbulent trading conditions and subdued cattle and export prices that the industry weathered over the latter half of 2008 may continue for another few months, although co-products markets will probably endure these conditions for much longer," Mr McRae said.
"It will be a case of ’waiting it out’ while importers run down inventories, credit markets thaw out, currencies stabilise and underlying consumer demand is assessed.
"As the fallout from the global financial crisis starts to settle and stability returns to markets, the Australian beef industry should be on a firmer footing.
"From the second quarter, the worst of the current trade disruptions should be behind the industry, and with stronger interest from Japan and US markets, and a partial return of Korea and Russia, exporters should finally start to see some benefit from the low Australian dollar in beef export sales and prices."
MLA said overall, Australian cattle prices are expected to strengthen during 2009, particularly for young cattle and cows, with the low Australian dollar, increased restocker and feeder demand and tight young cattle supplies expected to offset the impacts of the global financial crisis, falling economic growth and the US return to Korea.
"With the prospect of higher prices and lower costs, many producers outside of the drought regions appear keen to invest further in the industry and to rebuild their herds," Mr McRae said.
"We are predicting the herd to reach 28.58 million head by 30 June 2009, three percent higher than a year earlier. This should forge the way for higher supplies from 2010 onwards."
Herd rebuilding will constrain growth in beef supplies in 2009, with production forecast to rise by only two percent (with the increase mainly coming from higher carcase weights). Consequently, competition for available cattle will be robust, with exporters, rather than domestic processors, likely to provide the strongest competition for cattle.
"On the export front, we’re expecting solid demand in markets where currencies have appreciated the most against the Australian dollar," Mr McRae said.
