Back to the paddock, lambs start to surge

sheep_033

The rise and rise of the sheep and lamb market over the past month has all Meat & Livestock Australia price indicators sitting at between 18% and 39% above the five-year averages for the same time of year, and this week the positive trend has generally continued. Lambs headed back to the paddock or onto feeders found further momentum despite an increase in throughput, while processors seemingly are finding enough of what they need, heavy and trade lamb returns fell slightly.

With May recording Australia’s largest monthly sheepmeat export volume for the year, the demand side of the equation remains strong, so it will be winter supply, and the impact of a dry start to the year in the south on new season numbers, which dictates market movements going forward.

Yardings have held very steady for the third week in a row, with this week’s 205,848 lambs about 2000 head lower than last week, and the 98,764 sheep a lift of the same number. May was the biggest monthly yarding figure for the year so far and was more than 100,000 head higher than the same month last year.

Total sheep and lamb slaughter fell below year-ago levels for the last two weeks of May (the latest data available), which is the first time they have trended this way all year. Last week, slaughter fell by nearly 47,000 head from the week prior, and about 40,000 of this number were lambs.

A change in both rain having already fallen and more positive forecasts has put some competition into the market for lambs that need finishing or returning to flocks. The national Merino lamb price had the biggest lift this week, rising more than 37¢/kg to 844¢/kg, now at levels we haven’t seen since the spring of 2021. The light lamb and restocker lamb indicators also lifted, up 12¢/kg and 20¢/kg respectively, despite an extra 2900 light lambs and 2100 restockers going through the yards.

Mutton numbers fell and the national price lifted 16¢/kg to 635¢/kg, lifted by well above average returns in NSW yards Wagga Wagga, Dubbo and Forbes, which made up three of the top four yardings for eligible sheep. Trade lambs lost 10¢/kg nationally to be 974¢/kg, while in the east it dropped 12¢/kg to 983¢/kg.

Heavy lambs felt the only significant downward pressure, losing 30¢/kg for the week to sit at 971¢/kg. This, however, is still, like the rest of the market, a lift of over $1/kg for the month, and puts it at the biggest premium to both the five-year and 10-year average price, at about 40%.

Next week

If we get a significant rainfall event in southern Australia this coming week, as is forecast, it could further ramp up the demand for light lambs and push supply in the other direction. The heavy price is also one to watch, given its premium over historical values – we will wait to see whether it hits where processors need to be to maintain supply or there is more winter upside left in it.

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Data sources: MLA, Mecardo

Have any questions or comments?

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