Lamb and sheep prices continue to run hot, with trade lambs sitting in the sweet spot, and weights lighter and heavier lagging a little. Traditionally the influx of new season lambs in August and September will see lamb prices recede, but old seasonality is having less impact these days.
Price seasonality in lamb markets used to be highly reliable. Tight lamb supply at this time of year was a given, as the last of the old season lambs ran thin. As we moved into August and September, there was a rush to get new season lambs to kill weights, to get the last of the premium prices.
We do still see price declines to an extent, as shown in figure 1, with the Eastern States Trade Lamb Indicator (ESTLI) falling from 1200¢/kg cwt in July and August to 1070¢ in October last year.
Figure 1 also shows some other recent late winter and spring price trends. In 2020 lamb prices fell heavily in August, only to regain all of the fall in September and October. In 2021 lamb prices held steady at record levels in early spring, before declining in late October and November.
The five-year average trend shows a relatively gradual decline of 4% from July to November. There is, however, a large amount of variation between years depending on weather and the stage of the flock cycle.
Assuming prices are as high as they are going to go, at least for trade lambs, we can make a few assumptions and theorise where prices are going from here.
The flock is in a rebuild phase, with lamb and sheep slaughter declining to levels not seen since 2022. Slaughter has been at lower levels for 12 months. The last rebuild saw low slaughter for two years, from 2020-2022. Slaughter remained lower in 2023, when prices tanked, but there was the added Covid labour hangover.
This time in 2020 we were at a similar stage of the flock cycle, coming of record prices and low winter supply. Figure 1 shows the market got a fright in August and September, before quickly recovering. This is typical of growers offloading new season lambs, trying to beat further price declines, before it became clear that supply wasn’t going to stay strong through to summer. A very wet October obviously helped the recovery (figure 2).
What does it mean?
With the increase in lamb feeders spreading supply and pushing lambs to heavier weights it’s hard to see a dramatic price decline for lambs in general this year, unless of course rainfall is lacking. Figure 3 shows there is a higher probability of a drier than normal spring, which could see a rush of supply, and weaker prices. This might create opportunities for those looking to feed lambs on.
Key Points
- Lamb prices usually see a price decline from winter peaks, but timing differs across years.
- At this stage of the flock cycle price falls should be limited.
- Downside price risk lies in a dry spring elevating short term supply.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: BOM, MLA, Mecardo
