Ewe trading options despite lagging mutton market

The mutton price has only been heading in one direction since mid-winter, and that is down. It has lost more than 200c/kg since the annual July peak, and while more closely following traditional trends this year, is still well below average.

Slaughter has been operating at the other end of the spectrum, following trends but at a much higher level, and that supply dearth is obviously impacting returns. It is difficult to get too accurate of a gauge on females being purchased for restocking purposes rather than mutton, but if we look at some overall averages we can determine the cost of changing out old or dry ewes at the moment.

The national mutton indicator closed last week just shy of 270c/kg, which was more than 150c/kg stronger than the same week last year, but historically still very low. That level is 35% below the 10-year average for the same week, and nearly 45% lower than the five-year average. After peaking for the year at 480c/kg in July, mutton has been on the decline ever since – dropping for 12 weeks in a row. We can see from chart 2 that this is fairly standard, albeit at a higher level. We can also see from that chart that the price tends to hold fairly steady through to year’s end from now. This puts your 38kg dressed-weight mutton at $102.60 from now through to the end of the year.

Using AuctionsPlus data – as it is as likely to show restocker activity rather than processing as any other – two-year-old Merino ewes have been making between 234 and 276c/kg liveweight since the beginning of spring. Averaging that out at 250c/kg and using the same weight as we did for mutton to make things simple, this equates to $200/head. If we look at a slightly older product, that price drops to $180 for three-year-old Merinos and $160 for 3.5-year-olds on the box. Online returns for Border Leicester-cross and Merino-cross young ewes have been stronger this spring, averaging about 280c/kg live, or $224, with the three-year-olds at 212c/kg, or $170.

In the saleyards, young Merino ewes (two years) have been averaging closer to 160c/kg this spring, or $128, while the three-year-olds were slightly stronger at 190c/kg, or $152 a head. At the Hay, NSW, annual September offering, the top pens were making over $200, but buying demand was limited, as many to the south were still waiting for decent rains.

The forecast from Meat and Livestock Australia is sheep slaughter will hit 10 million by year’s end, and NLRS data shows us that less than 6 million have been processed for the year-to-date, meaning there are plenty left to come. To help us put this into perspective, if we exclude the last two weeks of the year, the five-year-average weekly sheep slaughter from now through to year’s-end is close to 124,000 head. Comparatively, the five-year average weekly throughput for the year-to-now is about 93,000. This year, sheep slaughter is averaging 140,000 head a week already. 

What does it mean?

While the mutton market is probably disappointing to many at the moment, it is facing very high supply, and it does currently also seem to be flowing through to the restocker ewe market. Currently, you can trade out cull sheep for about half the price you can buy back in young ewes, which traditionally is about the equation producers work off.

There is little to indicate replacements will pick up much steam from now to year’s end, and the medium and long-term average price for mutton indicates that price should be able to hold on for the remainder of the year, despite increased supply.

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Key Points

  • Mutton market dips along seasonal lines, stronger than last year but still sitting well below average levels.
  • Young Merino ewes averaging about $200/head online so far this spring.
  • Weekly sheep slaughter is about 45,000 head higher for the year so far and likely to trend higher for the remainder of 2024.

Click on figure to expand

Click on figure to expand

Data sources: Mecardo; Meat and Livestock Australia; AuctionsPlus

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