Independent livestock analyst Simon Quilty of Global Agri Trends shares his thoughts on Australian wool and meat markets through 2025 and 2026.
Higher mutton and lamb prices are inevitable in 2025 and 2026 as supply numbers dry up. The degree of this sheepmeat tightness will be significant, and prices may, as a result, improve significantly. This is aptly is well described by the catchphrase ‘less becomes more’: fewer sheep numbers will eventually see higher prices.
The best guide for understanding price increases is buried in the numbers, such as slaughtering, production, kill ratios, and lambing percentages. In this outline, we try to look at these various road signs to make some informed estimates on pricing.
High mutton and lamb kill
This chart shows Australian mutton kill and flock size. Data source: ABS
This year's calendar year mutton kill is likely to exceed 11 million head, which is higher than last year's, a considerable mutton kill at 9.7 million head in its own right. Given that few wethers are retained these days, the mutton kill represents the female kill, which depicts how the ewe flock is faring.
Australia’s flock continues to liquidate rapidly, with the mutton slaughter above 1.98 million breakeven for the eighth quarter in a row (or two years). The lamb kill also remains elevated, though it has come off the extreme highs of the previous quarter.
The lamb kill fell from its historic Q2 high of 7.1 million to 6.3 million head, which is still significant and the second-largest kill figure on record (Q2 was the largest). This unusually high lamb kill is disproportionate to the mutton kill and indicates that many female lambs were slaughtered, with fewer being retained for rebuilding.
Wool producers expect less wool production in 2024/25
When discussing the size of the flock and the impact on wool production this coming financial year, the AWI Wool Forecasting Committee has a 10 per cent (pc) reduction in the size of the wool clip.
So far, year-to-date, the wool clip is down 8 pc from last year, and it looks like it will pass 10 pc without much difficulty. Traders say the fall will likely be closer to 15 pc for the 2024/25 financial year, again pointing to tighter sheep meat supplies next year.
MLA lamb producers survey has a strong negative sentiment in ewe flock size
Another important cross-reference is the recent slaughter data against the MLA sheep producers survey, which examined farmer intentions.
The sentiment is a net 23 pc decline in the breeding ewe flock size amongst farmers surveyed.
In brief, the survey revealed:
- 22 pc indicated they would increase their ewe flock size,
- 33 pc indicating it would remain unchanged, and
- 45 pc indicated they would decrease their ewe flock size.
I agree with this overall sentiment, but there has been no further analysis of what this would equate to regarding the ewe flock size, unlike the lamb flock size estimate, which is expected to be down 1 pc. I believe this ewe flock size will fall by almost 10 pc next year; if so, the estimated MLA fall of 1 pc might be understated.
The ewe flock is the engine breeding room of the sheep industry, where almost 90 pc to 95 pc of next year's lamb drop will be determined. Such a significant negative intention should equate to a sizeable fall in the flock.
Conclusion
All roads lead to tighter sheepmeat supplies in 2025 and 2026. The knock-on effect will be higher prices as overseas and domestic buyers compete for a smaller piece of the sheepmeat pie.
This chart shows Australian trade lamb price and slaughter forecast. Source data: GAT. Forecast: ABS & MLA
The relationship between price and supply has not changed. The higher the supply, the lower the lamb prices. Conversely, the lower the lamb supply, the higher the lamb prices. What is important to note is that global demand for lamb is also improving, which will see a double impact next year and in several years to follow when supply tightens and demand increases.
With the lower lamb kill, I expect a significant improvement in pricing; the most significant fall in supply is expected in 2026 and 2027, when the greatest prices are expected.
This year, the trade lamb will average 727 ac/kg CW. I am forecasting that it will rise to an average of 860 ac/kg in 2025 and peak in 2026 at an average of 1000 ac/kg.
These are yearly averages, and I think 1050 ac/kg for a brief period next year is possible, but this price will be repeated many times in 2026.
In the end, ‘less becomes more’ means that the smaller the flock, the higher the price for both mutton and lamb goes, and those remaining producers will enjoy the benefits of having fewer participants.
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.
