HAS Australia's flock rebuilding really begun?
Meat and Livestock Australia says, or at least hopes, it has begun.
So do Australian Wool Innovation and market economists who subscribe to view that higher prices will lead to higher supplies.
In fact, MLA and the Australian Bureau of Agriculture and Research Economics have been forecasting a flock rebuild for the past two years.
But regardless of the estimates and the hopes, Australia finished 2009-10 with a flock of 70 million, 2.7 million down on 2008-09.
MLA is counting on the responses to its latest June lamb survey, which indicate the bottom has now been reached.
Improved seasonal conditions are another helpful factor.
The survey found that producers intending to increase their flocks outnumbered those who said they wouldn't by 40 per cent.
The response to rebuild was the strongest in Queensland and the weakest in South Australia.
MLA's latest survey included almost 800 responses from producers via an internet survey, and 1500 responses from a commercial survey conducted by the marketing group Axiom.
MLA sheepmeat research manager Alex Ball said Axiom research made a concerted effort to ensure the survey was fully representative of sheep producers - regardless of whether they were joining their ewes to Merino or terminal rams.
But, as MLA has found on many occasions in the past, breeding intentions don't always match the outcome.
Seasonal conditions, record prices, or financial demands were the overriding factors.
A factor in favour of a flock rebuild was this year's relatively high national average lamb marking rate of 93 per cent.
"The lamb survey results reaffirm what many agents and processors are starting to see on the ground - producers are making attempts to rebuild their flocks and shift into prime lamb production thanks to improved pasture conditions and positive price signals," Dr Ball said.
But countering this optimism for a flock rebuild were the survey results which indicated 40 per cent of respondents wanted to increase their turn-off of slaughter lambs next year.
While MLA is no doubt keen for a flock rebuild to meet increasing demands for sheepmeat, the reality is there's a general agreement that any flock rebuild depends on an increase in Merino ewe numbers.
The latest survey found there were 32,385 lamb-producing properties at the end of June, of which 7044 were pure Merino flocks and 26,843 producing a combination of Merino and other breeds.
The survey also found that only 49 per cent of Merino ewes are joined to Merino rams, which according to NSW Government sheep industry officer Alex Russell raised questions as to whether the current joining rate was sufficient for a sustainable flock.
Mr Russell told a producer forum at Uardry stud at Hay last week his notion of flock sustainability would require a Merino-to-Merino joining rate of 70 per cent, five lambings a ewe and a minimum 70 per cent weaning rate.
Like many livestock consultants and departmental officers, Mr Russell said the economics of sticking to a pure Merino flock were improving significantly as sheep prices rose.
He said much of the profitability would be dictated by the price of a Merino hogget ewe.
In a comparison of gross margins per dry sheep equivalent, Mr Russell said that when this hogget price reached $108, a self-replacing Merino flock that sold finished wether lambs would generate the same gross margins as a Merino ewe joined to a terminal sire.
