Heavy lambs are in hot demand as producers and processors struggle to find enough supply to keep up with the strong export trade. In the first two weeks of November, the National Heavy Lamb Indicator weekly average was sitting at its second strongest level on record for spring, only being eclipsed by the sky-high prices of 2021.
With lamb exports trending at record levels
and many sheep-producing areas missing out on a good early spring break,
premiums for heavy lambs over trade reached their biggest figure last week, and
the disparity between heavy lambs and mutton was at its largest ever on record
at the start of the month.
The national heavy lamb indicator closed
yesterday at 840¢/kg, well below its mid-winter peak for the year of 902¢/kg,
but historically strong for this time of year. It is not alone in being
significantly above year-ago levels, 336¢/kg stronger in fact, but it is also
trading well above longer-term figures, about 120¢/kg more than the
five-year-average, and 200¢/kg above the 10-year. At one point last month, the
heavy lamb premium to mutton indicator was at its highest ever, a gap of
556¢/kg, or 66%.
Supply-wise, the National Livestock
Reporting Service heavy lamb throughput number for the current price indicator
is 7367 head, the lowest it has been since the very first week of the year.
Breaking it down by state, unsurprisingly NSW had well over half those recorded
for the indicator, and yet the price was still nearly 8¢/kg higher. Victoria
has less than 2000 heavy lambs in the indicator, and averaged closer to the
national price, at just 2¢/kg stronger.
Although lamb slaughter for the
year-to-date is about 1.7 million head higher than it was last year, weekly
figures for the past three months have been below year-ago levels. The most
recent weekly slaughter figure is back to 2023 levels, and lamb yardings
reached their highest point since February last week. There were however still reports of lacklustre
heavy lamb supply, which according to Meat & Livestock Australia pushed the
heavy indicator to its largest premium over the trade price so far this year of
59¢/kg. Currently, that premium is 47¢/kg, which is still historically very
high.
The falling away of lamb export volumes in
recent months is being put down more to this dwindling of supply rather than
any real shift in demand. While export volumes are still tracking at record
highs, 12% stronger year-on-year, we can see from Figure 2 they have been on
the decline since July, and were close to five-year average levels for October.
Volumes to both the US and China were at their lowest monthly totals since
January in October.
What does it mean?
Seasonal conditions have improved in many areas, but lambs don’t fatten overnight, and while all signs point to good quality coming out of central and northern NSW, processors across the eastern seaboard are competing for those lambs to fill export demand.
Lambs from further south will be coming through later than usual, and likely not in as many numbers as may have been initially expected if some producers have cashed out early. This should underpin the current price premium over the rest of the market and prove profitable for those who can get lambs to the desired weight.
Key Points
- Heavy lamb prices operating at a premium as subdued supply struggles to keep up with demand.
- Lamb exports are trending at record levels, 12% stronger year-on-year, but dwindled in recent months.
- Finished lamb prices are expected to continue to receive strong support through to the end of the year, with any significant uptick in supply unlikely.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: MLA, DAFF, Mecardo
