PRICE consolidation and ongoing flock rebuilding will set the scene for the sheep and lamb industry in 2012.
After record prices in 2011, values should remain high but not average out at the lofty heights of 2011, Meat & Livestock Australia's Sheep Industry Projections showed this week.
MLA expects booming export markets, such as the Middle East, China and the US, will continue to feed the higher prices as supply remains in check on the domestic market.
Report author Robert Barker, said the forecast rise in lambs to be turned off through 2012 was expected to more than offset lower prices received per lamb, leading to an overall rise in farm incomes from lamb production in 2012 compared with 2011.
Nationally, trade lambs in the saleyards in 2011 increased 9 percent year-on-year to average 549c/kg. The big winners were producers selling restocker and feeder lambs which were 14pc dearer and averaged 585c/kg.
Likewise, sheep prices were up 11pc in 2011 to average 413c/kg. This market was much more affected by flock rebuilding efforts, hence restockers were willing to pay higher prices for stock.
Mr Barker said although flock rebuilding should remain a firm focus in 2012, prices were likely to ease in comparison to 2011 levels.
Last year gave the best indication that the long-term flock liquidation was finally over due to a 4.9 per cent increase in the sheep flock.
The Bureau of Statistics estimated the flock at June 2011 at 74.28 million head, with the biggest growth in the number of wethers for wool production.
MLA has gone one step further and forecast the 2012 flock to hit 77.38 million which was a rise of another 4.2pc.
The larger flock will certainly stand the industry in good stead to feed the strong demand for Aussie lamb overseas.
A burgeoning middle class developing a taste for lamb in China has resulted in lamb shipments reaching a record 29,600 tonnes (shipped weight) in 2011.
Mr Barker said with a combination of economic growth expected to continue at 8.2pc during 2012, an increasing population, and greater lamb supply from Australia, shipments of Australian lamb to China were forecast to increase a further 11pc, to 32,700t.
Our biggest lamb export market, the Middle East, remains a key market and it's also expected to expand during 2012.
Mr Barker said the Middle East remained an important market in terms of utilising the whole lamb carcase, with all cuts, including offal, utilised throughout the region from racks for the top hotels and restaurants to the lower value stewing cuts.
The future also looks brighter for mutton exports.
MLA chief economist Tim McRae said mutton shipments were also forecast to increase after a decline in 2011, which was due mainly to restricted supply.
"Strong demand in the Middle East is expected to continue, with more than 41,000t forecast to be shipped to the market in 2012," he said.
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