Ongoing heavy flock reduction sparks processor supply concerns.
Key points
- Prolonged dryness and poor pasture conditions has resulted in ongoing offload of ewes
- Processors offering contracts for winter to encourage producers to feed lambs
- Question markets over the numbers and timing of new season lambs
- Saleyard price volatility a function of numbers and quality
- Sheep with shape and weight are easy to sell
- Some restocker demand from parts of NSW but good areas are limited
- Spreads between export/trade versus light and restocker will continue to widen.
Dry conditions prolong heavy sheep kills
Extremely dry conditions from central NSW through the Riverina and all through Victoria/SA has kept the pressure on producers to continue to offload stock through the autumn. Only a run of short processing weeks around Easter/Anzac Day weekends brought sheepmeat kills below year ago levels.
The current offload started towards the end of 2023 after forecasters signalled a return to El Nino seasons and has only really let up for a brief period around Oct/Nov last year after unseasonal rain across SA/Vic. Many producers in the hardest hit areas are now making deep cuts to core breeding stock having to make the painful decision to offload scanned in lamb ewes. Estimates are that flocks have been trimmed by around 20 per cent (pc) in affected areas. This, higher than normal slaughter of ewe lambs during 2024 and a dip in scanning rates will result in a sharp fall in available supplies over coming months.
It will be interesting to see how processors on the east coast handle the coming period of lower seasonal supplies. East coast sheepmeat processors have been running hard since the second half of 2023 and may take the opportunity to rejig operations rather than pay exorbitant money for sheep and lambs. In WA for example, works often cut slaughter days back to three days a week and do two days of boning when supplies decline seasonally.
Demand for sheepmeat has held up well which has allowed markets to absorb strong production levels. Lamb exports have been relatively stable for the year with a fall in shipments to Iran being partially offset by an increase in volumes to China. Stable lamb exports in an environment of increased production suggest that domestic consumption has been stronger this year. Sheepmeat demand in Australia has benefitted from higher beef values.
Chart shows combined lamb and mutton kill 24/25 versus 23/24 and seven-year average. Source: MLA.
On mutton increased exports volumes into the Middle East and China has offset a fall in shipments to the US.
US market appears to be holding up for export lambs
Considering the season, lamb quality has held up relatively well with saleyards including good runs of grain assisted heavy lambs that are selling well. The only saving grace with the poor season is that lamb values have held up well and grain prices have been steady allowing a feeding margin. The main constraint to increased lamb feeding levels being the availability of stock water.
Heavy export lambs have stabilised between $8 to $8.50/kg carcase weight (cw) with talk that processors are about to offer contracts for June/August around $9/kg cw to encourage producers to feed lambs through winter.
These price moves will mirror the upward trend in heavy lamb values that was witnessed during the July/August period last year before new season lambs became available.
This chart shows the national saleyard indicators prices for heavy lambs this year versus 23/24 and seven-year average. Source: MLA
It appears that the US market has absorbed the 10 pc tariff on sheepmeat and that lamb export volumes appear to be relatively unaffected, however, we are yet to see consumer reaction to higher price levels which will be something to watch over coming months for lambs in this category.
Trade lambs following heavy lambs higher
Like with heavy lambs, trade lamb values have held relatively stable over the past month with the tightening in availability of these lambs relative to overall lamb supplies. Prices have held up either side of $8/kg cw with a gradual upward trend over the past few months. Lambs with good shape and weight will continue to sell to strong demand as processors endeavour to fill kill schedules with the expectation that sheep slaughter will soon start to decline seasonally, increasing processing demand for lambs.
Some works in WA are planning to close for seasonal maintenance from the third week of June for a month with supplies expected to contract in WA seasonally through that period. Agents report that it is still difficult to find a slaughter booking in WA but that should ease in the next couple of weeks ahead of planned closure. A live export ship has struggled to find suitable stock to fill a small boat order and has had to extend the deadline several times, indicating that WA supplies have almost been exhausted for the season until the new lambs become available.
This chart shows the national saleyard indicators prices for trade lambs this year versus 23/24 and seven-year average. Source: MLA.
Will China demand increase to support light lamb?
Trends in light lamb values have been more erratic with large saleyard offerings including increasing numbers of lighter lambs. Wagga saleyards for instance have had back-to-back weeks of near record yardings which have met with erratic processing demand. There still seems good appetite for these lambs with prices settling between $6.50 to $7.50/kg cw, pushing to the upper end of the range as heavy and trade lambs become more expensive.
This chart shows the national saleyard indicators prices for light lambs this year versus 23/24 and seven-year average. Source: MLA.
Lambs off feed to supply bulk of slaughter supplies through winter
In offering contracts for lamb over July and August at $9/kg cw, processors are signalling to lamb producers that they will underwrite lamb feeding over this period. Provided that feeders can secure feed supplies, there continues to be plenty of opportunities on store lambs which have moved to a premium over light lambs and into the $7-8/kg cw range. With little rainfall in the forecast for southern areas and the pasture growth window closed, feeding is the only option available to those with good water availability.
East coast restockers have been actively chasing lambs in WA which has strengthened the WA store lamb market. This demand has likely come from a feed yard associated with the processing sector looking to try and find lambs to put away on feed until July/August when they expect it is going to be hard to find suitable slaughter weight lambs.
This chart shows the national saleyard indicators prices for restocker lambs this year versus 23/24 and seven-year average. Source: MLA.
Rapid price improvement
Mutton values have seen rapid improvement over the past month with prices lifting to around $6 to $6.50/kg cw for good heavy sheep into the works across the east coast. Saleyard values have been highly volatile and have fluctuated between $5 to $8/kg cw, depending on the sale and sheep availability. Some producers have been enticed to offload breeding stock at the higher prices rather than choose to feed through winter. Those who have run out of stock water have no other option.
This chart shows the national saleyard indicators prices for mutton this year versus 23/24 and seven-year average. Source: MLA.
A South Australian processor has been active on sheep in WA, pushing the price up to $5/kg cw which has seen the WA processing sector forced to follow suit. The live export boat order in WA started at $80 to $90 per head but has had to push values up to $120 per head to try and entice supplies.
Latest forecasts by the WA Department of Agriculture have the WA sheep flock falling by around 25pc in two years since 2022 from 12.4 million head to around 9.5 million head. Total turnoff from WA including slaughter, live export and interstate transfers has risen from 4.65 million in 2022 to 6.55 million in 2024.
For the year so far to the end of March, interstate movements from WA have been well down compared to 2024 at 54,000 head versus 358,000 head. The early break enjoyed by southern WA should limit interstate movements at least until Spring after which seasonal conditions will determine the pace of turnoff. But it appears for now that the high volumes of turnoff from WA are finished for the time being.
From the rails
Read what Elders livestock representatives from around Australia are saying about the markets in their regions.
“Grass fatteners on the Central Tablelands are concerned about the ability to finish stock given the current conditions. Quality has been surprisingly good, but markets are starting to include a longer tail. Grain finishers to the west will be attracted by forward contract prices.
“They are predicting 30mm here over the weekend and given conditions remain mild with no frost it might be enough to encourage a bit of growth.
“Looks like there is going to be a real supply crunch. It’s hard to see big numbers of new season lambs coming out early across southern areas with many talking about weaning early and feeding lambs to get to slaughter weights which will delay these lambs coming onto the market.
“Sheepmeat markets have been very volatile with supplies responsive to price.”-Ben Emms, Livestock Manager, Elders Emms Mooney
| NSW sheepmeat saleyard indicatorsc/kg dw | ||||
| 14 May 25 | +/- week | +/- month | +/- year | |
| Lambs | ||||
| Heavy | 857 | 854 (+3) | 816 (+41) | 681 (+156) |
| Trade | 849 | 839 (+10) | 822 (+27) | 657 (+192) |
| Light | 751 | 762 (-11) | 727 (+24) | 540 (+211) |
| Restocker | 785 | 792 (-7) | 766 (+19) | 613 (+172) |
| Mutton | 523 | 594 (-71) | 450 (+73) | 319 (+204) |
Source: MLA
“Best lambs with weight cover are selling well, with most being grain assisted. Plainer and lighter lamb values are starting to ease with yardings including lots of clean up pens with offerings including lambs under 23kg that lacked shape and breed and sold to limited restocker activity.
“Sheep have been similar with those with weight and fat cover easy to sell but in contrast to recent weeks, exporters weren’t keen to chase the market. Plenty of light sheep with frame but lacking condition are selling to weaker price trends.” - Peter Homann, Elders National Livestock Manager.
| Victorian sheepmeat saleyard indicators c/kg dw | ||||
| 14 May 25 | +/- week | +/- month | +/- year | |
| Lambs | ||||
| Heavy | 847 | 828 (+19) | 794 (+53) | 662 (+185) |
| Trade | 844 | 820 (+24) | 798 (+46) | 645 (+199) |
| Light | 761 | 777 (-16) | 765 (-4) | 579 (+182) |
| Restocker | 784 | 829 (-35) | 760 (+24) | 602 (+182) |
| Mutton | 480 | 538 (-138) | 466 (+14) | 307 (+173) |
Source: MLA
“Key focus will be around those areas that have still got numbers that we're starting see a fair sell-off from around Broken Hill area. They haven’t had any rain for a while and things are starting to get tight. Stock are in good order and they are loaded up.
“Lamb has stabilised around that $8/kg with forward contracts out there at $9/kg cw. But I don't know if that’s going to be enough.
“It is hard to see us having many sucker numbers. Talking to our agents in our earliest areas, around Kimba and Cleve, on the west coast, they will be lucky to have any there by late August and early September, and they are not big numbers.
“It could be October or even November before we get any good numbers of suckers and then you are getting close to harvest. There's not going to be a big gap between when the suckers roll and when the stubbles become available – if we end up getting a crop.” - Damien Webb, Elders State Livestock Manager, northern South Australia.
| SA sheepmeat saleyard indicators c/kg dw | ||||
| 14 May 25 | +/- week | +/- month | +/- year | |
| Lambs | ||||
| Heavy | 802 | 782 (+20) | 816 (-14) | 627 (+175) |
| Trade | 806 | 848 (-42) | 822 (-16) | 611 (+195) |
| Light | 765 | 754 (+11) | 795 (-30) | 543 (+222) |
| Restocker | 760 | 770 (-10) | 781 (-21) | 583 (+176) |
| Mutton | 528 | 554 (-26) | 514 (+14) | 257 (+271) |
Source: MLA
“Not a lot of change over here. Lambs still a little bit difficult trying to get into the processors but they tell me that's probably only still another fortnight and things should free up a little bit.
“Some of the larger abattoirs will close for their annual shutdown about the 20 June, so probably only gives us about three weeks. The price probably won't change much on lambs until they come back and that's normally second week in July. We should see a price rise July through to August, before the new season lambs come on.
“Not that there's going to be a great deal of them. Normally that early lambing comes from the suckers from the northern area but, because of the season, they have pushed their matings back. Plus, there's a lot less numbers than previously, so it could be an interesting spring coming up for us all.
“Mutton on the back of eastern states processor putting out a price everyone has matched at $5/kg cw.
“Not a lot of mutton going through the processors. Most of the mutton that's around the guys are putting in the yards and seeing good competition. Even where we've had a bit of moisture down through the southern areas, things starting to get a bit tight and its ordinary through the northern third. So, in for another tough period through that country.” - Wayne Peake, Elders Livestock Manager, WA.
| WA sheepmeat saleyard indicators c/kg dw | ||||
| 14 May 25 | +/- week | +/- month | +/- year | |
| Lambs | ||||
| Trade | 678 | 660 (+18) | 647 (+31) | 501 (+177) |
| Light | 574 | 575 (-1) | 543 (+31) | 366 (+208) |
| Restocker | 590 | 577 (+13) | 482 (+108) | 270 (+320) |
| Mutton | 482 | 425 (+57) | 370 (+112) | 135 (+347) |
Source: MLA
“Last week we had 15 to 25mm of rain across the northern part of Tassie, the main restocker or grower areas. It came over three days, so it got an opportunity to soak in a bit and that's probably our first significant rain in the far north-west for autumn – it was very much needed.
“Sheepmeat job going along strongly up another $20 to $30 per head on good lambs last week with those rates around $8.20 to $8.60/kg cw in the yards. Current local trade lambs over the hooks are $8/kg cw with June contracts out for $8.30/kg cw.
“Mutton is tracking along nicely to add another $12 to $40 per head with better mutton well up over $200 per head.” - Gavin Coombe, Elders State Livestock Manager, Tasmania.
| TAS sheepmeat saleyard indicators c/kg dw | ||||
| 14 May 25 | +/- week | +/- month | +/- year | |
| Lambs | ||||
| Trade | 806 | 760 (+146) | 719 (+87) | 564 (+242) |
| Light | 720 | 792 (-72) | 623 (+97) | 427 (+293) |
| Restocker | 784 | 784 (n/c)) | 776 (+8) | 406 (+378) |
| Mutton | 498 | 644 (-146) | 451 (+47) | 237 (+261) |
Source: MLA
Sources: Price data reproduced courtesy of Meat & Livestock Australia Limited.
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