The Australian Bureau of Statistics (ABS) ‘Livestock Products’ report was released last week, and it confirmed what we already knew. Lamb and sheep supplies have been extremely tight, and we are probably at the bottom of the supply cycle.
Traditionally second quarter lamb and sheep supply doesn’t tighten significantly. In fact, the average of the last five years has the second quarter at peak supply, while the ten-year average has the second quarter slightly lower than the first and fourth.
Lamb slaughter in the June 26 quarter was down by 9.3% on the March quarter and an extraordinary 21.6% on June 2025. Quarterly lamb slaughter in June was slightly stronger than the low seen in September 2025 but was the lowest June level since 2020.
Figure 1 shows that while absolute lamb slaughter is now back to what was considered a relatively normal level for the ten years prior to 2023, the swings we have seen since 2022 have been pretty wild. When year on year changes in lamb supply move from plus 20% to minus 20% across two years, the magnitude of seasonal challenges becomes evident.
The swings in sheep slaughter are larger but have more historical precedent. Figure 2 shows sheep slaughter returning to 2022 levels, but not quite the extreme lows of 2020 and 2021.
Low second quarter lamb slaughter, along with weak sheep slaughter points towards the beginning of a flock rebuild. Weaker lamb slaughter in autumn generally means ewe lambs are being retained for return to the flock, but it takes a couple of years to this to build lamb supply.
Since 2010 sheep slaughter has tended to run in roughly three-year cycles of rising and declining slaughter levels. June was the fifth quarter of declining year on year sheep slaughter, suggesting it will be another 18-24 months before we see a real increase in sheep supply.
The last piece of data we’ll look at in this broad overview is the extraordinary rise in lamb slaughter weights. Figure 3 shows the average slaughter weight was 26.7kgs cwt in June, up nearly 2kgs on June 2025 and the highest on record.
The impetus for higher slaughter weights has been extreme lamb prices, combined with relatively low grain prices, resulting in very good margins on lamb feeding. With the influx of suckers in the spring lamb slaughter weights should fall, with costs of gain and store lamb prices to drive weights in summer and autumn.
What does it mean?
The ABS data is pointing towards a flock rebuild, which will take some time but eventually lamb and sheep supply will rebound. Lamb meat production has been somewhat bolstered by higher slaughter weights.
Key Points
- ABS data confirmed a heavy decline in lamb and mutton slaughter rates in the June quarter.
- Slaughter rates remain above the extreme lows of 2020 but point towards a flock rebuild.
- Lamb slaughter weights reached record highs as high lamb and low grain prices incentivised weight gain.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: Meat & Livestock Australia, ASX, CME, Mecardo
