Flock of sheep in dry paddock

There’s been plenty of money in mutton as the flock rebuilt over the past few years, but that trend has taken a turn for the worse - for those that are selling that is. If you are still in the market for more ewes, now might be your time. The national mutton indicator had a sharper fall at the end of last year than the other lamb categories and has fallen by 25% since the start of 2023. Unsurprisingly, it's the old supply and demand equation that is the primary downward driver of mutton.

The National Mutton Indicator (NMI) closed last week at 336¢/kg. This was 43% lower year-on-year, and 35% below the five-year average. In comparison, it opened both 2021 and 2022 above 600¢/kg, and we must go back to 2016 to find a price lower for the corresponding week. During the first four trading weeks of 2022, the NMI averaged 592¢/kg; this year it was 342¢/kg.


We know the sheep market has been having a stellar run, so it’s not just the price dip but also the lamb-to-mutton premium change we can see in figure 1 that is worth noting. In comparison, the Eastern States Trade Lamb Indicator (ESTLI) is tracking at just 8% below year-ago levels, finishing last week at 771¢/kg. Currently, that is a 57% premium over mutton. This time last year, that premium was just 30%. It was January 2014 the last time the spread between the two indicators was that wide.


Soaring throughput is a primary contributor to the mutton price having taken such a hit. The first month of trading in 2021 and 2022 saw ewe throughput plummet as the good seasonal conditions and strong market encouraged the flock rebuild.  This year, however, Meat and Livestock Australia have reported ewe yardings are up 78%, or more than 70,000 head, for the first four weeks of the year, compared to 2022. The first four weeks of slaughter data show an extra 175,00 sheep have been processed year-on-year, an increase of 40%.


MLA’s sheep industry projections will be out next week and will offer some more insight into what’s to come for sheep numbers. What we know already is that sleep slaughter rose about 4% year-on-year in 2022. MLA’s last projections, released in July, forecast it would be up about 20%, which should mean there’s a lot of sheep left out there.

What does it mean?

The supply side of the mutton equation is obvious from the above – there’s plenty of it. The latest MLA/Australian Wool Innovation Survey showed us that nearly 1 in 2 producers intend to expand their sheep operations this year, but the flock rebuild has reached a point where producers can turn off old and cull ewes without lowering overall sheep numbers. This will also impact the demand side, with fewer restockers in the market for ewes. This looks to be the trend for 2023. The silver lining is, the NMI-ESTLI differential historically tells us there’s likely little more downward pressure to come on the mutton price, and if you are in the market for ewes the money might be just right.

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Key Points

  • The National Mutton Indicator (NMI) is down 25% since the start of the year, and more than $2.50 below the same week in 2022.
  • NMI and the Eastern States Trade Lamb Indicator (ESTLI) spread is historically wide, with the NMI trading at a 57% discount.
  • Mutton throughput has soared, lifting nearly 80% year-on-year for the first four weeks of 2023.

Click on figure to expand

Click on figure to expand

Data sources: Meat & Livestock Australia, Mecardo

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