Turnoff nearly turned on

Market Morsel

Australian Bureau of Statistics (ABS) sheep slaughter numbers, along with live sheep export volumes, for the second quarter of 2024 have been released and it shows thats the sheep turnoff ratio (STR) is edging ever closer to flock liquidation territory. In Q1, 2024 the STR was sitting at 13.7% just 0.3% below the 14% threshold between flock rebuild and liquidation.

As of quarter two 2024 the STR has lifted to 13.9%, virtually sitting right on the fence between a flock increase and a flock decline. The scatter plot of the annual average STR versus the annual flock change highlights how the Australian flock is sitting at a tipping point presently. Meat & Livestock Australia are forecasting a 2.8% drop in the flock during 2024 and this seems a little heavy given the STR levels currently.

However, the year isn’t over yet and some anecdotal evidence, particularly from WA, suggests that there is a significant move out of sheep in some areas. As the year progresses we could see the STR continue to climb, pushing into liquidation territory and lend weight to the MLA forecast of a flock decline of the magnitude they are anticipating.