While plenty of producers were still busy feeding stock over the past few weeks, processors and saleyards did have three public holidays, affecting supply, demand, and pricing. Now we are out the other side, and hopefully a lot closer to an autumn break for those still waiting, we can have a look forward at how the lamb market might play out.
The National Trade Lamb Indicator has opened the week at 834¢/kg, which is nearly 40¢/kg stronger than a month ago. Putting this into historical perspective, the NTLI has only been higher on this particular week of the year once before, being 2020. It is 25% stronger than this time last year, and 9% above the five-year-average.
If we look at the most recent slaughter numbers, which were impacted by Easter, they were only 3% above the five-year average, but going back prior to that, they’ve been averaging around the 30% higher mark. Over-the-hooks grids are less influenced by holidays, and those we’ve seen sat close to the ESTLI last week, with the peak price of 860¢/kg in NSW and 820¢/kg in SA and Vic. There have also been contracts out for the end of June up to 880¢/kg.
Looking at both the five and 10-year average pricing for the NTLI, the winter peak comes for both in the middle week of July, being 773¢/kg and 751¢/kg respectively. Looking at the short-term average, the increase from the current week to the winter peak is just 13¢/kg, or 2%. In fact, the five-year-average weekly ESTLI price varies little from here through to the end of the year, only ranging to a maximum of 6% below as well.
We can see from our first chart that the 10-year price does vary slightly more, rising 69¢/kg, or 9%, between now and mid-winter, but only dropping to 2% below the current price between now and the end of the year. Using the longer-term percentages would give us a top of 906¢/kg this year, and a low point of 815¢/kg.
When it comes to slaughter, we can see from our second chart that lamb numbers have been consistently above year-ago levels, and will need to track slightly higher than the currently weekly average as reported by the National Livestock Reporting Service to reach the 26.2 million head Meat and Livestock Australia projects will get processed this year.
What does it mean?
All things staying equal, there is unlikely to be any significant variation in the trade lamb market at least from now through to the winter. Some extra upside could appear if the lack of rainfall in the south equates to a significant decline in lambs hitting the right specifications before sucker season begins, but if the projected slaughter is correct it is unlikely to be a big enough slow down to ramp up buyers past what the averages indicate.
Key Points
- Trade lamb prices are tracking strongly for this time of year despite heightened supply.
- Average price variation limited to within 10% each way from now through to the end of the year.
Click on figure to expand
Data sources: Mecardo; Meat and Livestock Australia
