While there was some earlier confusion over the specifics of the restriction, it has now been confirmed that red meat processors will be limited to production capacity of two-thirds of the levels of operation last month, or staff numbers over a three-month period. We looked at the likely implications of the restrictions earlier in the week HERE.
All states and categories experienced market weakness. Although It wasn’t Victoria that saw the worst of it, it was New South Wales, where volumes of lambs are hitting a cheaper market. The Restocker lamb Indicator in NSW dropped a notable 137¢ or 15%. The week on week fall was more severe in NSW than Victoria, however, trade lamb prices in Victoria have now got a 6 in front. The spread between the two state Trade Lamb Indicators is 29¢ or a 4% discount for Victoria. The Eastern States Trade Lamb Indicator fell 85¢ or 11% to 703¢/kg cwt. This is just 12¢ above the five-year average for this time of the season.
The National Mutton Indicator also lost 47¢ to sit at 528¢/kg cwt.
For the week ending the 31st of July, combined lamb and sheep yardings on the east coast were 16% below levels of the week prior, and down 29% on the five-year seasonal average. All eastern states contributed to the lower throughput, but no surprise, numbers in Victoria were as low as we’ve seen (Figure 2).
Slaughter did pick up last week, reflecting some of the temporary processor closures getting back up and running. 285,733 lambs were processed on the east coast, a lift of 8% on the week prior. New season lambs in NSW are propping up numbers, and Victoria saw an addition 25,000 lambs processed compared to the week prior. Sheep slaughter also saw a considerable lift last week, 76% higher than the week earlier.
Better to slow down than shut down
Next week
There’s no question of whether Victoria’s processing restrictions will weaken lamb and sheep markets in the short-term. Supply chains will be under the pump to manage the logistical challenges and ensure demand requirements can be met, especially before the spring flush. We’re likely to see more lambs building up on farms and in feedlots as a result. While the restrictions aren’t good news for prices, we saw what can happen when widespread shutdowns of meat processors occured in the US and if these restrictions help prevent that outcome (and further COVID-19 cases), we’ll be grateful they were in place.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Click on graph to expand
Data sources: MLA, Mecardo
Categories
Have any questions or comments?
Heavy lambs win the week
The lamb and sheep indicators were quite inelastic this week, with large swings in supply having less impact on the value. Restockers were very active
Middle East makes moves in sheepmeat market
Total sheepmeat exports are 15% higher for the year-to-date, with demand from the Middle East and the US on the rise, while volumes to China
New season lambs steal the spotlight
A decline in lamb numbers helped the market to switch direction and drive prices higher. Store lamb demand was notably stronger in key saleyards this
A slow start to spring lamb
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
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
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.
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.
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.