Rising from the depths

Market Morsel

After spending much of 2022 at record low levels the Sheep Turnoff Ratio (STR), an indicator of flock rebuild or flock liquidation, has continued to climb toward the 14% threshold that signifies what part of the flock cycle we are in. Australian Bureau of Statistics slaughter data for the June 2023 quarter demonstrates that the STR has lifted from 10.4% to 11.9% over the last three months.

While this level still points to a flock rebuild still being underway the trend shows that it is probably just a matter of time before we cross over 14% and into liquidation territory. On an annual average basis the STR is at 10.7% for 2023, compared to the 9.2% seen in 2022. A scatter plot of the annual average STR versus the annual change to the flock shows that an STR of 10.7% is consistent with a flock increase of about 5% for the 2023 season. In comparison MLA have a target of 3.6% for flock growth in 2023 according to their July sheep industry projections. An STR continuing to climb for the rest of 2023 could see the MLA flock growth target turn out to be pretty accurate.