Processing disruptions appear to have spooked what was already a weaker lamb market. The closure of multiple meat works in Victoria have appeared in the slaughter figures and look to have flowed through to prices as well, but not in the way we want, with significant falls again across all types of lamb.
Lamb slaughter was back in Victoria for the week ending the 17th of July, with 130,807 head processed. This was 9% lower than the week prior and the lowest weekly slaughter so far this year. However, it was sheep slaughter that really saw the impact of reduced processor activity in Victoria. Just 7,806 sheep were processed in Victoria, which was 66% fewer than the week prior. This brought total east coast sheep slaughter down to just 19,845 head which is 73% under the five-year seasonal average (Figure 1).
Sheep yardings were well and truly at a low last week, dropping 26% from the already low levels of the week prior. Despite lower throughput of lambs in Victoria, a lift in lambs yarded in NSW saw east coast lamb yardings up 10% on the week prior. Some new season lambs arrived at yards but were sold into weak demand.
The Eastern States Trade Lamb Indicator (ESTLI) dropped 66¢ to 751¢/kg cwt this week (Figure 2). All types were lower in eastern markets, but Heavy Lambs in Victoria made a noteworthy fall of 131¢ or 16% to sit at 685¢/kg. We haven’t seen Heavy lambs prices with a 6 in front of them in Victoria since April 2019. We can’t put the blame for falling prices solely on meat work closures and reduced buyers though, with all states feeling the weaker market and restocker lambs significantly cheaper. The eastern Restocker Lamb indicator lost all the gains made last week and then some, falling 128¢ to 787¢/kg cwt.
With so few sheep around for buying, mutton prices have held relatively firm amidst falling lamb values. The National Mutton Indicator lost just 15c on last week to 591¢/kg cwt.
Next week
While last weeks supply figures reflect disruptions in Vic, with slaughter so low there is still plenty of capacity at other processors to pick up the slack where needed in the weeks ahead. As mentioned in this week’s analysis article, the real issues for price will come if COVID-19 infections continue to impact processing in spring. In that case, we might see a bottleneck and market reaction similar to that experienced in the US in April/May.
In mid-2022 Mecardo looked at the international supply of sheep meat (albeit from a limited number of countries) showing how lower supply had positively correlated
A short week, and closed saleyards on Thursday has culminated in some relief on the supply front as combined lamb and sheep yardings nationally dropped
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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.
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Can we point fingers at Victoria?
Next week
While last weeks supply figures reflect disruptions in Vic, with slaughter so low there is still plenty of capacity at other processors to pick up the slack where needed in the weeks ahead. As mentioned in this week’s analysis article, the real issues for price will come if COVID-19 infections continue to impact processing in spring. In that case, we might see a bottleneck and market reaction similar to that experienced in the US in April/May.
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Data sources: MLA, Mecardo
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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.
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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.