Sheep update - June 2024

Sheepmeat markets have been beset by huge supplies for much of this year. The sheep kill is up 44 per cent (pc) on the 5 year average while lamb slaughter is not far behind running at +26 pc. But despite enormous supply, sheepmeat prices are rallying across the board. Good heavy and trade lambs have remained in good demand (up another 5 pc this month), whilst light (even for the month but +8 pc the last fortnight) and restocker (+10 pc on the month) lambs have started to rally hard. But the standout performer was mutton which gained 23 pc.

While sheep and lambs have been battling against large supplies for much of the past year, help is on the way from a seasonal reduction in supplies. Sheep and lamb slaughter has started to flatten out and should soon start to ease seasonally which should allow prices to firm. Demand for sheepmeat appears to have recovered, with a steep fall in prices over the past year looking to have won sheepmeat back a seat at the dining table.

Heavy export lambs continue to trek higher

The rally in lamb values has been led by heavy weight lambs assisted by demand from north America.

Export volumes and prices rising at the same time suggests that there has been a recovery in demand. Since bottoming out after Easter, imported lamb prices in the US have risen around 10 pc - about the same as the recovery in local heavy lamb prices.

For the year, lamb exports were up by 38,000 tonnes to 155,000 tonnes (+32 pc) with exports to north America up just under 50 pc to 40,000 tonnes from 26,000 tonnes, and more than doubling to the Middle East, with Iran lifting its lamb imports by 11,000 tonnes from just 161 tonnes.

Heavy lamb indicator c/kg lw

The table shows the heavy weight lamb saleyard indicator price for each state against last week, last month and last year. Source: MLA

The local trade lamb market is behaving in a similar fashion, trekking higher in line with the improvement in export lamb values, with supermarkets having to compete with prices being offered by export markets. Trade lamb values are now above year ago levels, despite supplies being much higher. Local lamb retail prices are now more in line with those of competing proteins.

Restocker lamb prices rallied strongly the past month, supported by the large discount to heavy weight and trade lambs (see chart below). Prices should continue to be supported through the next quarter by strength in slaughter lamb markets and a seasonal drop off in supply.

Trade lamb indicator c/kg lw

The table shows the trade weight lamb saleyard indicator price for each state against last week, last month and last year. Source: MLA

Restocker lamb indicator c/kg lw

The table shows the restocker lamb saleyard indicator price for each state against last week, last month and last year. Source: MLA

The national mutton indicator has firmed throughout May as supplies of good quality heavy weight sheep start to ease. Supplies of sheep will now start to tighten as we head into winter and prices should continue to move higher.

Supporting the mutton markets was a doubling in exports to the Middle East, which has more than offset a pullback in export volumes to China. Mutton exports were higher to most markets across the Middle East. Overall mutton exports are 15 pc higher than last year at 99,000 tonnes up from 86,000 tonnes.

Sheep indicator c/kg lw

The table shows the sheep saleyard indicator price for each state against last week, last month and last year. Source: MLA.

Sources: Price data reproduced courtesy of Meat & Livestock Australia Limited.