Pressure eases on sheep producers to destock

Pressure eases on sheep producers to destock


Analysis
FIGURE 3: National mutton indicator. The last time we saw destocking followed by restocking was, albeit to a lesser degree, in 2017. Prices trends are repeating, but this time around we are set for stronger prices.

FIGURE 3: National mutton indicator. The last time we saw destocking followed by restocking was, albeit to a lesser degree, in 2017. Prices trends are repeating, but this time around we are set for stronger prices.

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The Stock Take: Mecardo's Robert Herrmann writes about what recent rain has done for stocking rates.

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The year opened with very heavy sheep slaughter for the first three months of 2019, as dry weather saw continued lightening of stocking rates.

There was rain about last week, with some autumn falls that might set some growers up for the winter.

In response to the rain, prices rallied strongly.

Looking at where the rain fell we can see that a lot of sheep got wet.

The number one sheep region in Australia, the Central West, had its best rain in more than a year.

It was a similar story for the third largest sheep region of the Riverina, although only half of that region received good rain.

A couple of smaller regions of NSW, which hold around another 7 million head of sheep, also had better than average March rainfall.

The rainfall received last week, along with some earlier in March, should see feed start to grow for 22 per cent of the national flock, which equates to 27 per cent of the east coast flock.

Another 20.5 per cent of the east coast flock resides in areas that haven't experienced drought to the extent of NSW.

South west Victoria and south east SA and Tasmania have had dry summers, but last spring was okay.

While it will take a while to grow grass in NSW, we are now likely to see pressure to destock relieved for 40-50 per cent of the east coast flock.

The remainder of the flock is in more marginal areas and are likely to have already been heavily destocked.

What does it mean?

It's not just supply that pushes prices, demand will also be a factor.

Livestock markets are subject to a unique situation where rainfall sees supply decrease and demand increase all at once.

Some restocker demand was evident at saleyards last week and if we get some follow-up rains, it will only increase.

The story Pressure eases on sheep producers to destock first appeared on Farm Online.

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