shutterstock_161913629

It’s that time of year when we dust off the crystal ball and take a look at what markets are likely to do in 2024. There are plenty of unknowns amongst fundamental drivers of sheep and lamb markets, but at least supply is something we can get some sort of handle on.

Looking back at the forecast produced at this time last year is a little embarrassing.  Lamb and mutton prices had fallen, and we were forecasting a year of consolidation.  What we got was a year of further declines, reaching levels not seen for seven or eight years.

Massive increases in supply, combined with shifting demand have been the drivers of the lows.  Figure 1, which we wheeled out a fortnight ago shows much of the decline can be attributed to supply.  The question now is where lamb will sit on this curve next year, driven by the supply of lambs.

The main driver of lamb supply is the size of the flock.  Figure 2 shows lamb and sheep slaughter as a proportion of the flock.  Despite the stronger slaughter levels of 2023, the rapid increase in the size of the flock to 78 million head in recent years means we are not really at strong liquidation levels, but we might see a small decline.  We’ll know more when official flock numbers for 2023 are released in January.

Marking rates are the other major driver of lamb supply.  Good seasons have led to a couple of years of strong lamb marking rates.  The recent dry has been replaced by good rains, which could boost conception rates for early lambs.  There is, however, plenty to play out with seasonal conditions from here. 

We know from previous downturns that prices rarely bounce back to highs in the short term.  Back in 2013, it took 2 and a half years to regain peaks, with relatively steady prices thereafter, with the usual seasonal variation.

With better alignment of supply and demand in 2024, we could potentially see a 50% retracement of 2023 falls.  This would put the Eastern States Trade Lamb Indicator (ESTLI) around an average of 625¢/kg cwt.  Mutton prices around 300¢/kg cwt are nothing like the good times, but certainly better than the $1 doldrums of the spring just gone.

What does it mean?

Going back to Figure 1 an ESTLI at 650¢/kg  will require slaughter around a million head lower than this year. This is probable, given the number of ewe lambs and merinos which have made their way to market this spring, and the need to hold more young sheep in flocks.

On the mutton front, hopefully, heavy liquidation is behind us, and we’ll see more balance between supply and demand in 2024. Prices around 300¢ are not great, but it’s not giving them away.

Have any questions or comments?

We love to hear from you!

Print This Post

Key Points

  • Heavy supply and shifting demand caused the 2023 ovine price crash.
  • The coming year should see supply and demand move towards more balance.
  • A 50% recovery of 2023 falls will see more reasonable rates for lamb and mutton.

Click on figure to expand

Click on figure to expand

Click on figure to expand

Data sources: MLA, ABS, Mecardo

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!
Sheep

Mutton in the green

Prices rose for all bar one of the lamb and Sheep indicators this week, in what was a short selling week due to a public

Read More »
Sheep

Mutton makes 12 month highs

The market was buzzing this week, with stronger competition and lighter yardings driving prices significantly higher on all types of lambs and sheep. Some decent

Read More »
Sheep

Two speed spread grows

The imminent start of winter has brought with it the rain and it has delivered. The west finally got the drink it so desperately needed,

Read More »

Want market insights delivered straight to your inbox?

Sign up to the mailing list to get regular updates to new analysis and market outlooks

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
Listen to the podcast

Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.

Photo of a farmer surrounded by Merino sheep in dusty yards
Research: Analysis of the Australian sheep flock

In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making. 

Image of harvested grain pouring into a chaser bin
SERVICES AND CAPABILITIES STATEMENT BROCHURE

We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.