Nutrien Ag Solutions sheep farm.

The extra supply we’ve been waiting for in the lamb market seems to have arrived this week, putting a halt on what has been a slightly rising market in recent weeks.

A majority of the lamb indicators lost roughly between 10¢/kg and 40¢/kg this week, while mutton only fell by 3¢/kg. That said, mutton is the only one of the main prices that has still fallen compared to a month ago, so it had less room for downward pressure.

Supply-wise, the latest lamb slaughter figures (last week) fell by 6%, but yardings for this week increased by a significant 45% to 237,939 head, which we should see come through kill numbers over the coming weeks. Sheep yardings also rose this week, albeit only by 10% on the previous week, and last week’s slaughter was also on the up, increasing to over 153,000 head. This took total sheep slaughter for the year to more than 46% higher than for the same period in 2022.

This is one of the reasons the National Mutton Indicator is now very close to 80% lower year-on-year, closing this week at 102.54¢/kg. The NMI has lost about 4¢/kg in the past month, and while now not at its lowest point in that period, is very close to, operating at 60% below the 10-year-average for the indicator.

Lamb numbers eligible for the main indicators rose across the board this week, except the Merino Lamb Indicator. The light lamb indicator lost most of the gains it made last week, dropping by 31¢/kg, however it has shown the most improvement over the past month, up by nearly 107¢/kg. Restockers followed suit, with the national price closing at 327¢/kg, down just shy of 30¢/kg for the week, but more than 50¢/kg stronger than four weeks ago. They remain at the biggest discount year-on-year, however, more than 450¢/kg cheaper. Heavy lambs showed the most resilience this week, losing less than 3¢/kg to finish at 505¢/kg.

The Eastern States Trade Lamb Indicator (ESTLI) of 484¢/kg was down week-on-week but remained at its strongest level since the beginning of August. Victorian yards, which have a later sucker season, performed well on price, with major yards of Bendigo, Ballarat, and Horsham operating at 20¢/kg or more above the ESTLI for trade-eligible lambs.  

Next week

Historically lamb slaughter remains firm to slightly higher for the remainder of the year as the new season lamb supply continues to come onto the market. Looking back to last year, lamb and sheep yardings were only lower than the current week for one week of the next 7 (through to the end of the year).

This supports the outlook that we will have to wait until 2024 to see any significant uptick in prices. The current mutton price discount and producers getting stuck with old lambs in a falling market earlier this year could prompt them to send new season lambs regardless of price, however, those with the capacity to hold onto them could take the punt of a new year price increase.

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Data sources: MLA, Mecardo

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