A month into the spring, the new season lambs are coming, but not as quickly as usual. For the first time in 2024 we have seen lamb slaughter lower than last year’s levels, yet prices continue to drift lower.
Lamb and
sheep slaughter adjusted lower in the winter, and it was later than usual
thanks to a shift in supply patterns. Historically,
the low in slaughter comes in July, this year it was August.
September
has seen slaughter lift, with Meat and Livestock Australia (MLA) weekly totals
at 550,000 head in mid-September. The
autumn and winter peaks were just over 600,000 head, so there is still some
space left to fill.
It would
seem slow new season lamb supply is to holding processing numbers back. Figure 1 shows lamb slaughter tracking below
last year’s levels for the last eight weeks.
The last two weeks have seen sheep supply improve, and slaughter space
has been taken up by mutton.
Figure 1
shows sheep slaughter hitting a new 2024 high.
In fact, sheep slaughter has been at its highest level since 2018. If these rates continue it will be further
evidence that the flock is in decline.
The small
uptick in lamb supply has had an impact on prices in the last few weeks. Figure 2 shows the Eastern States Trade Lamb
Indicator (ESTLI) have left the winter 800¢ plus levels behind, and declined
quite quickly into the mid-750¢ range.
While prices
have fallen, lambs are still valued well above the heavy supply period of
autumn, so we can’t be bemoaning lower values too much.
On the
mutton front bemoaning prices is probably warranted. Extremely strong supply levels have pushed
the National Mutton Indicator (NMI) back below 300¢/kg cwt. While mutton prices are vastly improved on
this time last year, they are still well behind the 2022 prices which provided
a great boost to sheep producer income.
What does it mean?
Normally weak lamb supply in the early spring would suggest we’ll see stronger numbers later. The issue this year is that we really won’t know how many lambs hit the ground until the October survey numbers are released.
For mutton, strong slaughter is removing more breeders from the system. Good for lamb prices next year and beyond, and mutton in the longer term.
Key Points
- Lamb slaughter has had a slow start in spring, tracking below last year’s levels.
- Sheep slaughter has increased and hit a six-year high on weekly data.
- Lamb prices remain good, while mutton values have weakened under supply pressure.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: MLA, Mecardo
