Issue number: 5
December 2016
Sheep Notes
Newsletter of the Department of Agriculture and Food, Western Australia (DAFWA)
Summary
· The Western Australian sheep flock was estimated to contain 14 million sheep and lambs in July 2015, including 7.5 million breeding ewes.
· As of mid-November 2016, 189 000 sheep and lambs had been trucked east from WA, a 108% increase when compared to the full year in 2015 (91 000).
· In November 2016:
o The heavy lamb over the hooks indicator averaged 468 c/kg carcase weight (cwt)
o The heavy lamb saleyard indicator averaged 447 c/kg cwt
o The mutton over the hooks indicator averaged 290 c/kg cwt
o The mutton saleyard indicator averaged 293 c/kg cwt
· The live export wether quotation averaged $90/head in November 2016, 4% higher than at the same time last year.
· The Western Market Indicator for wool averaged 1384 c/kg in November 2016. It peaked at 1410 c/kg in July 2016- the highest monthly average received in the last decade surpassing the highs reached in 2011.
· Total WA sheep slaughter has increased 10% year on year when comparing the first ten months of 2016 to 2015, from 3.14 million to 3.47 million head. Lamb slaughter increased 16% during this time, from 2.13 million to 2.47 million head.
· There has been a year on year increase of 11% in the total volume of WA sheepmeat exported between January and October 2016 and a 4% increase in the value of exports from A$262.1 million to A$273.5 million.
· There has been a 22% increase in the volume of WA lamb exported during the first ten months of 2016, surpassing the total volume exported over the full year in 2015. The value of lamb exports (Jan –Oct 2016) increased 10% compared to the same period in 2015, from A$172.0 million to A$190.0 million.
· There has been a 5% increase in the number of sheep exported live from WA in 2016 (Jan-Oct) from 1.42 million to 1.49 million, but a 2% decline in the value from A$173.2 million to A$169.8 million.
· There has been a 9% increase in WA wool receivals when comparing 2015 and 2016 (Jan-Sept) from 54.7 million kg to 59.7 million kg and a 10% increase in the value of wool exports from A$392.0 million to A$429.5 million.
Contents
Flock size and dynamics 3
Flock projection 4
Interstate movements 5
Slaughter 7
Wool production 8
Prices 9
Heavy lamb indicator 9
Mutton indicator 9
Live export quotation 10
Wool prices 11
Quantity of exports 13
Sheepmeat 13
Live sheep export 15
Wool 16
Value of exports 18
Sheepmeat 18
Live sheep export 21
Wool 22
Key Market- Jordan 25
Appendix- Western Australian sheep turn-off 2015/16 27
For further information contact:
Name: Kate Pritchett
Phone: +61 (0)8 9892 8499
Email:
Page 27 of 27
This work is supported by Royalties for Regions funds through the Sheep Industry Business Innovation project.
Important disclaimer
The Chief Executive Officer of the Department of Agriculture and Food and the State of Western Australia accept no liability whatsoever by reason of negligence or otherwise arising from the use or release of this information or any part of it.
Copyright © Western Australian Agricultural Authority, 2016
Flock size and dynamics
Following two decades of decline the Western Australian (WA) sheep flock reached its lowest number in mid-2011 when it numbered just 14.0 million head following a severe drought in the prime sheep producing regions of WA. Between 2010/11 and 2012/13 the flock went through a recovery phase rebuilding to 15.5 million, an increase of 10%. However, over the last two years the size of the WA flock has contracted, declining to 14.0 million by mid-2015 (Figure 1). Similarly the number of breeding ewes has also declined during the last ten years. In 2004/05 there were 13.3 million ewes but this number has fallen to 7.5 million in 2014/15.
Whilst declining in absolute terms, WA sheep turn-off as a proportion of the flock size has increased in recent years. This is reflective of the rising importance of sheepmeat, increasing marking rates and the changing structure of the flock. In 2004/05 turn-off as a percentage of the flock was less than 30% however this has risen to around 40% in 2014/15.
Figure 1 Closing number of sheep and lambs, and closing number of breeding ewes in WA and total turn-off for WA (Based on Australian Bureau of Statistics (ABS) data, Department of Agriculture and Food, WA (DAFWA) analysis)
Over the last 25 years, the WA sheep flock has changed in structure and composition. As evident in Figure 2 the breeding ewe component of the flock has increased significantly from 45% in 1990 to 62% in 2015, whilst at the same time the proportion of wethers in the flock has decreased from 32% to 9%. This is largely due to the rising importance of sheepmeat, especially lamb, to the sheep enterprise and the reduced reliance on wool due to low prices following the stockpile era.
Figure 2 Changes in the Western Australian flock composition between 1990 and 2015 (Based on ABARES AgSurf data, DAFWA analysis)
Flock projection
It is estimated that the WA sheep flock may number just 13.0 million in mid-2016 as seen below in Table 1.
In July 2015 the ABS estimated that the total number of sheep and lambs in WA was 14.0 million head. Provided the five year averages held true, approximately 5.85million lambs were marked and total turn-off, which includes sheep and lamb slaughter, live export and interstate transfers, came to 5.86 million. Including an allowance for losses on farm, this gives a closing number of 13.0 million sheep for the close of the 2015/16 financial year- a year on year decrease of 7%.
Given a total turn-off of 5.86 million and an opening number of 14 million head, a marking rate of 103% would be required in order to maintain the flock at 14 million. The five year average from 2011 to 2015, as reported by the ABS, was 88% for Western Australia.
Table 1 Flock projection for Western Australia 2015/16 (DAFWA analysis)
Opening number of sheep / 14.0 / million / †Number of ewes joined / 6.63 / million / ^
Marking rate / 88% / ^
Lambs marked (est.) / 5.85 / million / ^
Turn off
Lambs slaughtered / 2.75 / million / †
Sheep slaughtered / 1.36 / million / †
Live exports / 1.67 / million / †
Interstate movements / 0.08 / million / *
Total turn off (est.) / 5.86 / million / ^
Losses (~7%) / 1.0 / million / ^
Closing number of sheep (est.) / 13.0 / million / ^ / (-7.1%)
† ABS estimate
^ DAFWA estimate
* PIRSA estimate
Interstate movements
Since August 2016 there has been an abnormally high number of sheep and lambs being transported from WA to the Eastern States. These sheep are a combination of sheep going to slaughter and being used for restocking purposes.
In August 25000 total sheep and lambs moved east from WA which was an increase of 219% compared to the 8000 that were transported east in July. Numbers appeared to have peaked in October at over 78000 for the month but were still high in the first half of November reaching 22000.
Between January and mid-November 2016, 189 000 total sheep and lambs had been moved east from WA. This is up 108% from 91 000 in 2015. It is shaping up to be a similar year to 2013 when 195000 sheep went east but doesn’t compare to 2010 or 2011 when sheep and lambs totalling 1.02 million and 417000 went east respectively (Figure 3).
Figure 3 Interstate sheep and lamb transfers from WA through the Ceduna checkpoint in South Australia (PIRSA data, DAFWA analysis)
The large number of sheep and lambs moving east is in part due to price differences between sheep sold in Eastern and Western Australia. As seen below in Figure 4 there has been a large price difference in the mutton sale yard indicator between Victoria and WA between early 2015 and October 2016. The difference in the mutton indicators has ranged between 61 c/kg cwt and 127 c/kg cwt during 2016. A price difference of 127 c/kg as experienced in October, equates to a difference of $30.48 per head for a 24 kg animal.
Figure 4 Monthly averages for the sale yard indicator (SYI) for WA and Victorian mutton (18-24 kg carcase weight) (Based on data from Meat and Livestock Australia's National Livestock Reporting Service, DAFWA analysis)
The price of heavy lambs in Victoria has been higher than that found in WA saleyards since August 2014; however the margin has greatly increased during 2016. During 2016 the WA indicator has moved between being 35 c/kg cwt less than Victoria in February and 173 c/kg cwt less in July 2016. In October the average for WA was 412 c/kg cwt and 551.25 c/kg cwt for Victoria- a difference of 139.25 c/kg cwt or $33.42 per head for a 24kg cwt animal.
In a similar fashion to that of the heavy lambs, the trade lamb saleyard indicator has also been much higher in the Eastern States than in WA. During 2016 the trade lamb indicator has been between 44 c/kg cwt and 144 c/kg cwt less than that seen in the East. A price difference of this magnitude has not been seen in the last 10 years.
The margin between Victorian and WA saleyard indicators for Merino lambs has also widened during 2016. In previous years WA has at times had a higher price for Merino lambs; however during October the WA indicator was 437 c/kg cwt, 77 c/kg less than the Victorian counterpart. This was an improvement on September when the difference was 137 c/kg cwt.
The saleyard restocker lamb indicator is measured in $/head, and as seen below in Figure 5, the WA and Victorian indicators diverged in 2016. Between July 2015 and November 2015 the margin increased from a difference of $3/head to $31/head, but narrowed back to $9/head in August 2016. As of October 2016 however, the margin has blown back out to $32/head- the highest it has been since January 2011.
Figure 5 Monthly averages for the sale yard indicator (SYI) for WA and Victorian restocker lambs (0-18 kg) (Based on data from Meat and Livestock Australia's National Livestock Reporting Service, DAFWA analysis)
Slaughter
Between January and October 2016 Western Australian lamb slaughter reached 2.47 million head, a 16% increase when compared to the same period in 2015 (Table 2), which was also a strong year for lamb slaughter. If the trend continues for the remainder of 2016, a total of 2.95 million lambs may be processed by the end of 2016- the highest throughput on record.
Sheep slaughter decreased 2% year on year from 1.02 million to 1.00 million and is on trend to reach 1.28 million for 2016.
Table 2 Number of sheep and lambs slaughtered (million head) in WA (Based on ABS data, DAFWA analysis)[1]
WA / 2014 / 2015 / Jan-Oct 2015 / Jan-Oct 2016 / 2016p / ChangeSheep / 1.50 / 1.31 / 1.02 / 1.00 / 1.28 / -2%
Lambs / 2.19 / 2.54 / 2.13 / 2.47 / 2.95 / 16%
Total / 3.96 / 3.85 / 3.14 / 3.47 / 4.24 / 10%
The trend seen in Australia as a whole was quite different to that seen in WA as seen below in Table 3, as there had been a decline in both the number of sheep and lambs slaughtered during the first ten months of 2016 compared to 2015. Sheep slaughter was down 16% and lamb slaughter was down 2%. If these trends continue for the remainder of 2016 there would be a total of 7.16 million sheep slaughtered and 22.48 lambs slaughtered.
Table 3 Number of sheep and lambs slaughtered (million head) in Australia (Based on ABS data, DAFWA analysis)
Australia / 2014 / 2015 / Jan-Oct 2015 / Jan-Oct 2016 / 2016p / ChangeSheep / 10.09 / 8.49 / 6.81 / 5.74 / 7.16 / -16%
Lambs / 22.25 / 22.88 / 19.05 / 18.72 / 22.48 / -2%
Total / 32.34 / 31.36 / 25.86 / 24.46 / 29.64 / -5%
Wool production
As demonstrated in Table 4 wool receivals for the first nine months of 2016 have increased 9% in WA when compared to the same period during 2015. Wool receivals have increased from 54.7 million kg to 59.7 million kg in that time and are forecast to reach 85.3 million kg by the end of 2016. This increase may be due to the high prices experienced during 2016, encouraging producers to sell wool stored on farm.
Between January and September 2016 there has been a 1% decrease in the volume of wool received nationally from 254.1 million kg to 251.2 million kg.
Table 4 Table 5 Wool receivals (million kg greasy) (Based on ABS data, DAFWA analysis)
2014 / 2015 / Jan-Sept 2015 / Jan-Sept 2016 / 2016p / ChangeWA / 74.0 / 78.1 / 54.7 / 59.7 / 85.3 / 9%
Australia / 350.6 / 359.5 / 254.1 / 251.2 / 355.3 / -1%
Prices
Heavy lamb indicator
During the last decade the Western Australian heavy lamb price indicators have generally increased as illustrated by Figure 6. There has been a marked upward trend in both the sale yard indicator (SYI) and the over the hooks indicator (OTHI) during this time. In mid-2006 both indicators were below 350 c/kg, but by mid-2016 were in excess of 500 c/kg.
During 2016 the heavy lamb OTHI rose from 505 c/kg in January to peak at 544 c/kg in July before slipping to 468 c/kg in November 2016, a 2% decrease compared November 2015.
The SYI for heavy lambs has been more variable than the OTHI. In January it averaged 472 c/kg before rising to 505 c/kg in August, however has declined to 447 c/kg in November 2016, 9% less than November 2015.
Figure 6 WA monthly averages for over the hooks (OTHI) and saleyard indicators (SYI) for heavy lambs (22kg+ carcase weight) (Based on data from Meat and Livestock Australia's National Livestock Reporting Service, DAFWA analysis)