ANZ Agri Commodity Report predicts 200c/kg price rise for wool and 1000c/kg record for lamb in 2022-23

Australia’s dual-purpose sheep producers are tipped to receive a 200c/kg price rise for their wool and their lamb is predicted to smash a record 1000c/kg mark in the 2022-23 financial year.

The buoyant trade predictions come after the Australian sheep industry had been heavily affected by lockdowns and lack of labour availability and processors were still playing catchup for a year of low slaughter rates, according to ANZ’s latest Agri Commodity Report.

ANZ head of agribusiness Mark Bennett said the Australian sheep industry had a solid first half of the year — not headline catching like the cattle industry — but a consolidation of the past five years growth and a profitable operating level.

“While the sheep sector has been less impacted by the restocking zeal which has pushed cattle prices into the stratosphere, it has also felt a greater impact from some of the side effects of COVID-19 and associated lockdowns,” he said.

He said saleyard restocker lamb prices had trended downward for much of the year — albeit with some significant volatility — driven by low numbers in the yards because of seasonal factors, including wet weather and producers holding stock back in the hope of a price rise.

The decline in slaughter and processing throughout the first half of the year had seen many producers retain stock on farm, leading to the expectation of many heavy lambs still to hit the market.

Mr Bennett said as the national flock was expected to hit highs not seen since 2013, and the competition for land from cropping and beef, the steam might come out of the national flock rebuild.

“While there are several issues overhanging from the pandemic still impacting saleyard prices and supply, the coming winter months should help regain a demand/supply balance,” he said.

“After that, all signs point towards a spring kick in the market with some in the industry even going so far as to speculate that the National Trade Lamb Indicator may breach the magic 1000¢ mark.

“For woolgrowers, the outlook is somewhat buoyed by the view that Australian wool remains somewhat under-priced given the lack of global supply of fine wool following the concerns over Foot and Mouth Disease in South Africa limiting their supply.

The ANZ outlook report found the Australian wool industry as a whole had shown a period of relative stability with the Eastern Market Indicator remaining stable throughout much of the year.

While certainly down from the highs of more than 2000c/kg, the indicator price seems to have found its level around 1400 to 1500c/kg.

“This view seems to be supported by ABARES which is predicting an almost 200c rise in the average Eastern Market Indicator in 2022-23 which lines up well with what the industry seems to consider the right level,” Mr Bennett said.

This may mean the EMI could rise between 1600 to 1700c/kg.

Mr Bennett said as wool production picks up as a result of flock rebuilding and a strong season, the increased domestic supply may keep some slight downward pressure on prices.