Sheepmeat market outlook winter 2026

Elders Business Intelligence Analyst Richard Koch discusses his data driven forecast for the Australian sheepmeat market this winter and the factors influencing it.

Processor, feeder and restocker demand keep sheepmeat prices steady 

In contrast to the cattle market, prices across the sheep and lamb complex have been relatively stable as the industry navigated its way through tight supplies and disruptions to key export markets in the Middle East. Lamb values have ranged from $10.50-11.50/kg dressed weight (dw) for lamb and $7.50-8.50/kg for mutton for most of the year. Processor demand adjusted as prices moved out of these price brackets, to keep values mostly stable as traditionally high levels through autumn.

Ironically, despite much weaker kill levels in comparison to recent years, Elders agents are reporting trouble obtaining kill space, with processors concentrating on working lamb supplies contracted earlier in the year - the top contract rates of around $12.50/kg dw being close to or above the best saleyard results.

Growth in lamb feeding sees export lambs outweigh trade numbers

The other unique quirk to this season is that there is an abundant supply of heavy weight lambs and limited supplies of light and trade weights. This has resulted in these categories obtaining premiums which is unusual, particularly through winter and after the peak US demand season. Solid feedlot and restocker interest have keep store lamb prices firm for much of the year.

In terms of export performance for the year so far, although overall lamb export volumes are down 11 per cent, Australia has increased the proportion of exports going to higher value markets in the United States (US) +2 per cent, China +4 per cent and United Kingdom (UK) +7 per cent. These three countries combined with markets in the Middle East take 85 per cent of all Australian exports.

US market holds despite higher prices

Lamb is having its moment in the US, perhaps driven by a shortage and the high price of beef, and a new generation of consumers is seeming to enjoy lamb as a red meat alternative to beef.  The other trend that is assisting sales into US is that this market is focussed on higher value cuts out of heavy carcases – which are in good supply despite lower numbers of lambs – so the US market is the least likely to see a decline in volumes over the next quarter. Consumers in the segments that Australian lamb targets in the US are not sensitive to higher prices as some other export markets. US domestic lamb prices are averaging around 50 per cent higher than last year and about the same amount about the 5-year average as US domestic lamb supplies dwindle.

Popularity of Genghis Khan style restaurants keep Asian export firm

Asia has been another solid source of export growth for Australian lamb in 2026. Growth in demand from China (+4 per cent) and Korea (+10 per cent) our two largest Asian markets (70 per cent of Australia’s lamb exports to Asia) is due to popularity of Genghis Khan style restaurants and less competition from New Zealand. Lamb is also sold in these markets in larger bulk packs which are popular amongst shoppers in warehouse-style stores for its better value for money offering and longer storage life.

In our third largest Asian lamb market, Malaysia, export volumes have held relatively steady (-3 per cent).  Most of Malaysia’s sheepmeat imports are used in high-end and mid-tier hotels and restaurants, especially in Kuala Lumpur and consist of frozen products, with chilled lamb accounting for a relatively small volume. Among Australian exports, 64 per cent of lamb were shoulder cuts, suitable for foodservice and adventurous home cooks, while 50 per cent of mutton were carcases, trunk meat, and trimmings.

Encouraging for lamb exporters over the next quarter, at the annual SIAL trade show in Shanghai China last week, lamb stands outperformed beef with some reporting 100 container lots sold in last week for smaller players.

Australia makes progress in UK while NZ focusses on the EU 

Australian lamb is starting to get a foothold in the UK market with consistent year on year growth aligned to improved market access (+7 per cent for the year to May). Australia predominantly exports lamb legs into UK retail channels.  

Australia has access to a duty-free transitional quota of 41,667 carcase weight equivalent (cwe) tonnes of sheepmeat into the UK in 2026 while the NZ-UK Free Trade Agreement (NZ-UK FTA) came into force allowing a duty-free transitional quota of 35,000 cwe tonnes. 

New Zealand lamb has a larger footprint in retail in the EU due to more advantageous trade access. In contrast, to Australia’s duty-free quota of 5,851 cwe tonnes, the NZ-EU FTA allows NZ to export 125,769 cwe tonnes to the EU annually.

The NZ focus on lamb exports to the EU, is allowing Australia to expanding market share in the UK (under preferential access arrangements vis-à-vis NZ) but also into Asia and north America. 

Middle East conflict sees a significant drop in export activity to the region

There has been a drop in lamb exports to Middle Eastern markets (-36 per cent) due to high cost relative to other proteins, disruptions to trade routes and higher freight costs. This has left Australian sheepmeat less competitive compared to other regional suppliers and a drop off in the tourism trade through the Middle East.

Prior to the conflict, while most of the Middle East sheepmeat market is a commodity product in carcase form, premium lamb consumption and imports have been growing, particularly in Gulf markets, driven by tourism growth, a young population and rising disposable incomes. 

Excellent southern season has turned sellers into buyers through pastoral areas 

The excellent season being enjoyed across large Australian southern sheepmeat regions has flipped normal seasonal supply arrangements on the head. Pastoral areas where we usually draw our numbers from this time of year. The season is exceptional, from the northwest part from South Australia right up through to the north to the eastern side of Broken Hill and there's a swag of stock going in there which is supporting store lambs and mutton markets as graziers there look to rebuild numbers. 

Due to firm demand from each segment of the sheepmeat industry, prices for lambs matched our lofty price forecast for the autumn season. The table below shows Australian Saleyard Indicator Prices (ac/kg cw) by degment. Source: Meat and Livestock Australia (MLA) and Elders forecasts and projections.

(a) Actual, (f) Forecast, (p) Projected based on ssales in June so far.

Based on forward contract rates it is likely that rates will hold at around current level right through the winter.

Growth in the lamb feedlotting industry has added another element of demand. This, combined with restockers are keeping the processors honest with the best forward contract $12.80/kg on a trade lamb with other works in the high $11’s/kg dw. 

But processors have signalled that they are only willing to buy up to a certain price point which appears to be around $12/kg dw and around $8/kg dw. If prices get above these levels, processors may respond by dropping kill rates. 

The reason we have kept our forecast prices levels steady around these levels are that some processors have announced that they will wind back kills to match expected seasonal declines in stock availability. 

The good news for processors and the lamb industry in general is that the improved seasonal conditions enjoyed in southern sheepmeat regions have meant that scanning and lambing rates have been excellent. Large parts of important lamb regions are enjoying their best autumn for years after a strong finish to last spring. 

Elders agents are reporting that that have never seen so many good, healthy lambs, feasting some of the best fodder crops you will likely see. The main risk is that some southern areas have not received enough runoff rain to replenish on farm water storages. 

While lamb availability will remain constrained somewhat by the heavy reduction in flock numbers over the past three years and a move to keep some ewe lambs for flocks rebuilding, it is likely that lamb supply will improve in the spring compared to last year.

Reports that eastern states feeders were trying to contract Western Australian store lambs at +$5/kg liveweight tells you that prices are unlikely to ease too far before the start of spring. Although there may be some of the normal seasonal spring supply pressure, it is unlikely that prices will fall off a cliff. This is why we have kept our forecasts relatively firm through the winter months before easing moderately in September. 

(a) Actual, (f) Forecast, (p) Projected based on ssales in June so far.
Source: Meat and Livestock Australia (MLA) and Elders forecasts & projections.