06 SEP 2024

Sheepmeat market spring 2024 forecast

Elders’ Business Intelligence Analyst Richard Koch discusses his data driven forecast for the Australian sheepmeat market this spring. 

Prices for sheepmeat have firmed strongly during the winter quarter with mutton and slaughter ready heavy and trade weight lambs leading the charge. Mutton gained +35 per cent (pc) during the quarter to 375c/kg dw whilst heavy and trade lambs gained +20-22 pc to sit at 810c/kg dw. Restocker and light lamb categories have rallied in line with the overall sheepmeat complex but the discount to heavier weight classes has widened throughout the winter quarter.

This chart shows the national saleyard indicator price for heavy, restocker lambs and mutton. Source: Meat & Livestock Australia (MLA)

The sheepmeat complex has strengthened from mid-year despite exceptionally large supply as local processing capacity returned to normal and as producers liquidated flocks in response to poor prices and adverse seasonal conditions during the second half of 2023.

Lamb slaughter has been +19 per cent on last year and +27 per cent on the five-year average, while mutton slaughter has been even higher +15 per cent on last year and a whopping +50 per cent on the five-year average.

Chart showing National Livestock Reporting Service (NLRS) weekly Australian lamb slaughter. Source: MLA
Chart showing National Livestock Reporting Service (NLRS) weekly Australian sheep slaughter. Source: MLA

Aiding Australian sheepmeat values has been solid demand with exports to the US and Middle East leading the way and offsetting some softness in Chinese demand.

Chart showing sheepmeat exports to major regions for the year-to-date 2024 compared to 2023. Source: Department of Agriculture, Fisheries and Forestry (DAFF).

While demand has been resilient for much of this year, some exporters are noting that there is resistance to higher prices with processing margins tightening up in recent months owing to the rise in local values. Difficult trading conditions are being noted in most large sheepmeat importing countries with the exception being the north American market where trading conditions are holding for now.

Looking towards spring, the sheepmeat complex appears to be transitioning to a period of tighter supply. The very poor seasonal conditions experienced since last spring across major lamb producing areas of southern Australia will dictate market conditions in the months ahead.

The key impacts will be lower ewe joinings last spring as producers liquidated flocks, lower lambing percentages as ewes were joined in sub optimal conditions last spring and lower numbers of slaughter ready new season lambs. Reports are that new season lambs are around 5 to 6 weeks behind and many producers are struggling to finish lambs to slaughter weights due to poor pastures.

Increased supplies of store lambs and limited demand from restockers has led to a greater than normal discount for these categories through the winter and this is set to persist through the spring unless there is a dramatic turn-around in seasonal fortunes.

Chart showing the difference between slaughter lamb prices and restocker lambs in 2024 compared to the five-year average. Source: MLA

Supporting prices through the spring will be lower supplies of slaughter lambs and mutton as slaughter numbers moderate back down towards the five-year average. Limiting upside will be resistance to higher prices and some softening in export market demand as global economic growth moderates through the spring.

Table showing Australian Saleyard Indicators for June, July and August with forecasts for spring

Escalating tensions across the Middle East (a key market that has driven the recovery in Australian sheepmeat prices in 2024) and the potential disruption to key trade routes pose a threat to forecast values, particularly on light lamb and mutton.


 

The information contained in this article is given for the purpose of providing general information only, and while Elders has exercised reasonable care, skill and diligence in its preparation, many factors (including environmental and seasonal) can impact its accuracy and currency. Accordingly, the information should not be relied upon under any circumstances and Elders assumes no liability for any loss consequently suffered. If you would like to speak to someone for tailored advice relating to any of the matters referred to in this article, please contact Elders.

Livestock Now logo