IT has been another exciting and challenging 12 months for the sheep and wool industry.
Producers once again saw record high sheep and lamb prices, while wool prices have again tracked upwards and now sit at their highest level for the past two years.
When it came to the challenges, seasonal conditions and market issues for both meat and wool due to COVID again affected producers.
Meat & Livestock Australia (MLA) reported in its February 2022 Australian Sheep Industry Projections that the sheepmeat industry has a bright future as a result of a strong supply forecast in 2022 and the export industry being well-placed to continue capturing opportunities on the global market.
The report said confidence remained high across most parts of the industry, including the production side where seasonal conditions and overall market prices are performing strongly in historical terms.
MLA forecast in the report the national sheep flock is expected to grow to its highest number since 2013 this year.
It said on the back of successive strong seasonal conditions across the key sheep producing States of New South Wales and Victoria, the national flock would grow by 4.9 per cent or 3.5 million head in 2022.
"A favourable autumn and winter rainfall period for WA in 2021 would also boost the flock's growth in 2022, as the State looks to rebuild numbers following recent average conditions," MLA said.
In 2021, the national sheep flock was at its largest size since 2017 with a projected total of 70.9m head and MLA forecasts that the national flock will reach 74.4m in 2022.
The report also said as the national flock grows, the lamb cohort of 2022 will be sizeable and sheep slaughter volumes will lift from their lows of 2021 and as a result, the sheepmeat industry in Australia will be poised to continue to capture global opportunities in both emerging and established markets.
"As the high-value Australia-UK- Free Trade Agreement (A-UK FTA) comes into effect later in 2022, alongside the emergence and growing demand from other markets, the sheepmeat export industry will only continue to strengthen," MLA said.
In 2021, lamb slaughter was predicted to reach 20.25m head, about 350,000 head higher than 2020 but due to the large size of the 2021 lamb cohort, MLA expects a promising influx of lambs to hit the market in early 2022, with lamb slaughter expected to reach 21.60m head in 2022.
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When it comes to sheep slaughter MLA expects it to reach six million head in 2022, marking a 17.6pc increase, or 900,000 head on 2021 levels.
It said these projections for higher sheep slaughter represented the maturation of the Australian sheep flock rebuild and follows consecutive years where older ewes have been retained onfarm.
However it also said COVID continued to challenge the processing sector and if unresolved, labour shortages could significantly affect Australian abattoirs and reduce slaughter capacity at a traditionally critical time of year for lamb processing.
When it comes to carcase weights MLA isn't forecasting significant changes to carcase weights in 2022.
The report said given the abundance of feed across the key lamb producing regions of eastern Australia during both 2020 and 2021, the average national lamb carcase weights (CWT) were expected to gain a modest 0.2kg to reach 25kg in 2022.
On the back of growing lamb slaughter volumes and stabilising, but historically high, carcase weights MLA is forecasting Australia will see record lamb production in 2022 and 2023.
In 2023 MLA predicts lamb production to reach 567,000 tonnes CWT.
When it comes to sheep production in 2022, MLA believes it will reach 152,000t CWT, marking an increase of 24,000t CWT.
When it comes to sheepmeat exports in 2021 the report said more than one million tonnes of sheepmeat was exported globally, which was down 6.1pc on 2020 volumes and Australia was the largest exporter, followed by New Zealand and the UK.
It said China remained the largest import market for sheepmeat at 372,000t, followed by the US, which imported more than 115,000t, and the UK, at 43,000t.
MLA reported in 2021 overall sheepmeat exports from Australia increased by 0.5pc and at the same time, the overall value of sheepmeat exports rose by 5.3pc to $3.96 billion.
It said the bigger lift in value reflected a strong increase in the unit value of sheepmeat products from Australia, with each unit of sheepmeat valued at $9.05/kilogram compared to $8.54/kg in 2020.
In 2021 the volume of chilled sheepmeat exports dropped by 12.2pc, while frozen exports increased by 4.9pc.
When it came to a breakdown of Australia's sheepmeat exports in 2021, lamb represented 65.3pc of total exports, while mutton accounted for 34.7pc.
MLA reported exports into the US in 2021 increased by 18.7pc on 2020, to 93,349t and of these exports chilled lamb accounted for 43.3pc, frozen lamb 32.3pc and frozen mutton accounted for the remaining 24.4pc.
On the domestic front, MLA said in the report that with uncertainties and trade tensions in the international markets, the importance of the domestic market was increasing.
The report said lamb consumption in Australia made up a large proportion of total global lamb consumption but the domestic utilisation of lamb has been gradually dropping since 2015.
In the March quarter of 2015 according to MLA Australia, domestically consumed 60,645t of lamb compared to 39,751t in the September quarter of 2021.
It said the quarterly utilisation has cumulatively dropped by 34pc, whereas the retail price has increased 40pc over the same period, trending upwards from $13.29/kg to $18.59/kg.
"The sales volume of lamb shows strong resilience to the price movement in Australia's domestic meat sector," MLA said.
In terms of mutton consumption, it is minimal in Australia.
With good demand for sheepmeat both domestically and abroad, it has ensured sheep and lamb prices have remained strong for producers and outperformed long-term historical averages.
But it hasn't only been sheep and lamb prices which have put a smile on the face of producers in the past 12 months – wool prices have also tracked steadily upwards from the lows it hit in September, despite COVID related issues such as transportation logistics and costs affecting the industry.
Last week the Western Market Indicator sat at 1515 cents per kilogram clean, not only was it up 154c/kg on the same sale last year but it was at its highest level in two years.
At last week's prices a bale of 17 micron wool according to the Australian Wool Exchange's (AWEX) weekly wool market report is worth $3263, while a 19 micron bale is worth $2089 and a 21 micron bale $1619.
In contrast, last year in the same weekly report AWEX had a 17 micron bale valued at $2738, a 19 micron at $1928 and a 21 micron at $1504.
