LAMB and mutton producers will enjoy higher prices in the coming year, driven by strong export demand and falling local sheepmeat production.
The steady decline in Australia's sheep flock will continue in 2014-15, sliding to 70 million by year's end, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) says in its latest quarterly agricultural commodities report.
ABARES said saleyard lamb prices had increased 30 per cent between January and May to around 557 cents a kilogram, the highest monthly average since mid-2011.
Over the same period saleyard sheep (mutton) prices increased by a whopping 84pc to around 358c/kg, the highest monthly average in two years.
Average lamb saleyard prices for 2013–14 as a whole were estimated by ABARES to have averaged about 475c a kg, a year-on-year increase of 23pc and were tipped to lift by another 5pc in 2014–15 to 500c on the back of reduced lamb supply because of a depletion of breeding ewes.
Lamb demand from major export markets, particularly China and the Middle East, was expected to remain strong and would continue to place upward pressure on prices.
Average saleyard prices for sheep were predicted to climb by 15pc in 2014–15 to 300c a kg after an estimated increase of 39pc in 2013–14 to average 260c/kg.
Demand for mutton in Asia, which supported higher prices in 2013–14, was expected by ABARES to remain strong while the reopening of Bahrain as a live export market was likely to boost sheep prices in Western Australia.
Lamb production was forecast to drop by 7pc in 2014–15 to 440,000 tonnes, in line with a seven per cent slide in lamb slaughter to 20.3 million.
Lamb production in 2013-14 was estimated to have lifted by 3pc to about 471,000 tonnes, the largest volume on record.
ABARES has forecast a 30pc slide in mutton output in 2014–15 to 159,000 tonnes following estimated production of 226,000 tonnes in the past year.
Adult sheep slaughter rose by 22pc in 2013–14 to an estimated 10 million but in the coming year was likely to slip 30pc to seven million.
Australian lamb exports lifted by an estimated 11pc in 2013–14 to a record 223,000 tonnes, driven by stronger demand in major Asian export markets, particularly China and Hong Kong.
In the 11 months to May, lamb exports to Asia were about 33pc higher than the same period last year and rose to all othert major export destinations in the Middle East, EU and US.
However, lamb exports were forecast to decline by 12pc in 2014–15 to 197,000 tonnes because of reduced availability.
Similarly, mutton exports were tipped to fall by 32pc in 2014–15 to 122,000 tonnes, following an estimated 25pc jump in 2013–14 to 180,000 tonnes when shipments to Asia, particularly China, grew by about 60pc.
In contrast, exports to the Middle East fell by 14pc.
Live sheep exports were tipped to rise by 6pc in 2014-15 to about 2.2 million head following the reopening of the Bahrain market, compared with 2.1 million in the past 12 months.
In May Australia signed a health protocol with Iran, opening the way for a restart to trade with that country, Australia's largest export market for live sheep before the Iranian revolution in 1979.