ANZ Positive On Sheep And Wool Sector, But Warns Against Reliance On China

According to the Australia and New Zealand Banking Group’s agricultural insight report, the AU’s sheep meat and wool sectors have benefitted from the drop in the national flock, to the benefit of the market, including those that sell industrial meat slicer for sheep meat, with the industry at the strongest it’s been in decades.

The report, however, also noted the AU’s dependence on China as a major customer for sheep meat and wool, saying that any industry that’s primarily on one big buyer is putting itself at risk, explaining that the wool and sheep meat industries is so heavily reliant on China means that they need to be ready in case the Chinese market goes quiet for a certain time.

The report was released early in March during the ANZ’s latest customer delegation to Asia, in Shanghai, and echoes what other analysts say about the wool and sheep meat, based on the state of supply and demand.

The report also highlighted  the sharp drop in sheep numbers in the AU’s national flock, which went down from about 180 million back in 1970, down to about 69 million, by 31,000 producers, in 2019, but also noted how rapid flock growth would be questionable, as it would require farmers with mixed and single sector operations to stop cropping acreage for a few year, or for Aussie cattle growers to make the switch to growing sheep, both of which are questionable.

As such, the ANZ noted that they’re expecting Australian national sheep number to remain about the same, not going down as bad as recent decades, but also not growing rapidly.

According to ANZ Head of Agribusiness Mark Bennett, the domestic decline in the number of sheep was due to a number of factors, including, low sheep and wool prices, as well as a shift from sheep to grain and cattle farming, which was more attractive compared to other options.

However, for those in the meat industry, and those that sell many a industrial meat slicer, the report also notes that sheep meat is a good opportunity, as it notes that global consumers are increasingly embracing safer, more affordable quality meat, and Aussie lamb and mutton fills that niche quite nicely.

The report notes that, even if sheep meat only accounts for a small chunk of the meat in the global market, there’s still enough of it to lift prices and give momentum to the industry.

 

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