A couple of weeks ago Mecardo looked at the Australian Bureau of Statistics (ABS) quarterly lamb slaughter data, showing March was the largest quarter on record. The strong numbers have continued in the second quarter, with the pattern lining up like 2018 and 2019.
The March
quarter saw a huge 24% year-on-year increase in lamb slaughter. In fact, the last three quarters have all
been new records for lamb slaughter. No
doubt the high prices of recent years, along with better seasons, have
increased the number of lambs being produced.
The June
quarter is likely to continue the trend of rising lamb slaughter. More slaughter days and continued growth in
capacity in Figure 2 show a more consistent lamb slaughter level on the East
Coast in May and early June.
Since the
start of April east coast lamb slaughter has been up 23% on last year. If we use that increase on last year’s ABS
quarterly numbers, it gives a massive 7.4 million head slaughter. If we add the first two quarters the
slaughter estimate for the first half of the year comes in at 14.38 million
head.
We can’t
really extrapolate first-half slaughter rates into an annual estimate at the
moment, as we are about to enter a highly uncertain period. Can lamb supply remain strong, or will we see
something closer to 2018 and 2019 in terms of supply trends?
Figure 2
shows that in 2018 and 2019 first half lamb slaughter ran close to record
levels for the time. The collapse in
supply came in June, as old-season lamb ran dry, and new-season lambs took until
September to come in numbers.
Interestingly
in both 2018 and 2019, spring and early summer, slaughter rates never got back
to the levels of earlier in the year.
Figure 3
shows what happened to prices in the winter of 2018 and 2019. In 2018 the price rise started towards the
end of June and extended to 50% gains by September. In 2019 the rally started earlier and held
strong for much of the winter.
What does it mean?
The September quarter is traditionally the lowest lamb slaughter rate for the year, and it looks like it might be lining up that way in 2024. With record slaughter space, competition could head up and see a strong rally in prices if supply tightens. Many producers have nothing to sell in the September quarter and will be hoping the better prices last. This depends largely on the new lamb crop, and how quickly lambs can get to slaughter weights.
Key Points
- Lamb slaughter is set to break another quarterly record in the June quarter.
- In 2018 and 2019 record first-half slaughter saw a strong decline in the September quarter.
- The impact on prices was a 30-50% winter price rally.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: MLA, ABS, Mecardo
