THE issue of paying big money for store sheep could need much consideration in coming seasons.
It's an issue that has caused some lamb producers pain this winter when the market didn't deliver any price premiums.
The main trend to come out of the sheep projections mid-year update, released by Meat and Livestock Australia last week, is that flock rebuilding is happening faster than anticipated.
And with the projected increase in overall sheep population comes a downgrade for likely price trends for lamb, based on the changing supply-and-demand situation.
On price, the sheep projections report states: "As forecast in February, prices have come off the peaks registered during early 2011 to more sustainable levels for the whole industry.
"This trend is expected to continue as new season lamb turnoff increases in the second half of the year. It's anticipated that in following years, lamb prices could ease further as production expands."
So while it's far from gloomy, it does suggest farmers should not be overly optimistic when it comes to putting a value on the future earning capabilities of a young ewe.
The first of the specialist first-cross ewe sales are only weeks away and expectations are still high that the best could command $250-plus, like last year.
The question is whether it is a sound investment if prices such as 500c/kg-plus for prime lambs aren't going to be readily available in coming seasons.
The faster-than-expected flock rebuilding stems from the turn-around in the season, plus the rebound in wool prices and attractive returns for sheep meat compared to other livestock commodities.
MLA forecasts the sheep flock will grow by 4 per cent this year to 70.8 million head this year (up from 69 million forecast early in 2011).
Flock rebuilding is then forecast to have the Australian flock at 75 million in 2015 (projected at 71 million).
While predicting livestock numbers is a contentious issue, MLA points to the low sales of sheep and lambs earlier this year and figures for the past two-years as evidence of determined flock rebuilding by farmers.
While the increase in supply is expected to impact on saleyard price, the overall picture for Australian sheep meat remains upbeat because of dwindling global supplies.
Lamb production has tightened in New Zealand (Australia's main export competitor), while other countries, such as Uruguay and the US, have experienced major reductions.
The Uruguay flock has fallen from 20 million-plus in the mid 1990s to less than 8 million today, according to MLA.
As a result, the outlook for exports of Australian sheep meat remains strong, with the latest figures showing the value of lamb sales topped $1 billion for the first time last financial year.
The figure was achieved despite a slight decline in the amount of lamb sold, highlighting the increase in price achieved, despite the difficult trading conditions of the global economy and high Australian dollar.
The US market delivered the best return for lamb, with sales reaching $332 million, despite shipments falling by 10 per cent.
The Middle East was the second most valuable market for lamb, up 19 per cent to $218 million.
The main casualty from the high prices being paid for lamb appears to be the Australian domestic market.
