Lambskin market reaches three-year high on back of China demand

Lambskins were virtually worthless this time last year but a shortage of supply and the resurgence of demand from China has led to prices climbing to $11 a head.

Wagga Wagga-based livestock agent James Tierney described the skin market as a “free kick” for sheep producers, who are already selling into a lucrative lamb market. 

“There’s been a massive change. This time last year, sucker  skins were either worthless or $1 maybe $2 a head,” Mr Tierney said. 

“Fast forward to now and the last couple of months and they’re all making from $8 to $11 a head.” 

As an animal by-product, sheepskin supply is directly linked to the number of sheep being processed.

But the market can still be difficult to predict with demand largely dictated by China’s fashion industry, particularly the footwear sector. 

“It probably goes into what’s happening in China … everyone’s got to eat but not everyone has got to make use of skins.”

The Dubbo-based sheepskin manager for Fletcher International Exports, Gerald Webster, said there were usually two or three Chinese buyers and tanneries who drove the market.

“Their demand is domestic and I think as COVID-19 is opening up markets are opening up. It’s increasing the domestic sales,” Mr Webster said.

Processor and shipping delays impact supply levels

Getting sheepskins to China has been challenging, with both processors and shipping held up by COVID-19 disruptions. 

“Most processors have had reduced production, labour is probably the biggest thing that has caused that but there have been outbreaks in certain areas and that’s slowed factories down,” Mr Webster said.

“Shipping is bad and it probably hasn’t reached its crisis level yet.”

Although sheepskin prices have soared to the highest levels seen since May 2018, commodity analyst Matt Dalgleish said it was still far from the record of nearly $20 a head a decade ago. 

“I don’t think we’re going to see it as high as that, but certainly there’s not going to be a big rush of animals coming out of the woodworks,” Mr Dalgleish said. 

“Supply for all of these co-products is going to be pretty tight still and that’s going to underpin these prices somewhat.

“But seasonally we do see an influx of lambs hit the Victorian market in the next few months, which might take some of the immediate movement out of that price. 

“I don’t think we’ll see it collapse but it might stabilise a bit as those lambs move through.”