IF YOU thought 2009 was a good year for lamb, then 2010 is going to be even better, according to Meat and Livestock Australia's latest industry projections.
MLA is tipping average saleyard and over-the-hooks lamb prices will exceed the record highs of last year.
And along with the optimistic price outlook, MLA is predicting a 2 per cent lift in lamb production, despite forecasting that ewe numbers will decline a further 1 per cent this year to about 43.3 million head.
MLA sheepmeat analyst, Kara Tighe, said the increased production would come from improved seasonal and feed conditions and a further shift from wool to lamb production.
"Saleyard prices are expected to exceed 2009 prices," she said.
MLA is forecasting a lamb slaughter this year of 21.17 million head, slightly up on the 2007 record of 21.15 million head.
Total carcass weight is estimated at 440,000 tonnes, up 2 per cent on last year's 434,00 tonnes.
The two negatives in MLA's outlook are the high Australian dollar and the forecasted rises in Australian and New Zealand lamb supplies.
For its latest outlook, MLA is counting on an exchange rate of US85c-95c.
Other risks to the outlook could be a major demand shock or the emergence of a new major supplier such as China.
But in the medium term, Ms Tighe said a combination of population growth, especially in Muslim and Hispanic communities, recovering global economic growth and supply constraints were expected to place upward pressure on lamb prices.
On the mutton front, MLA said the outlook was good for prices but grim for supplies.
MLA is forecasting that mutton or sheep slaughterings will fall 12.6 per cent this year to 8.9 million head, while live exports will be down 13.1 per cent to 3.1 million head.
Ms Tighe said the reduction in the national flock over the past four years had been underpinned by the high turn-off of Merino wethers and Merino breeding ewes in response to poor returns to wool relative to alternative land uses.
This down-sizing of the wool flock had reduced the availability of cull ewes and wethers to the extent that the record high sheep prices offered last year failed to draw sufficient sheep to meet export demand for sheepmeat.
Ms Tighe said there were now signs the flock reduction was slowing, with the flock expected to close on June 30 at 69.9 million head, down 2 per cent.
In the longer term, MLA is counting on the flock falling to 69.5 million by 2012 before rising to 70 million in 2014.
