Restocker and light lambs, for the most part, avoided further price drops with 8¢ and 2¢ declines a piece for the national indicators. The Eastern States Trade Lamb Indicator (ESTLI) rose 2¢ to 774¢/kg cwt. The national Merino lamb indicator lost 37¢ to 580¢/kg cwt. At the time of reporting, the total throughput to the yards per the NLRS was 297K head of lamb and sheep combined, which is 14% lower week on week, but sheep supply was 11% higher this week.
Per MLA saleyard reports, NSW drove the decline in yardings this week, with Forbes, Dubbo, and Wagga all experiencing lower supply. Wagga saw excellent condition trade lambs and processor demand for lighter lambs. In the current export market climate, there is fortunately a home for most articles at current price levels. In Victoria, Ballarat lamb supply was dominated by secondary types, with Hamilton providing ideal trade lambs. Across the board, the scarcity of heavy lambs continues to provide premiums for those selling export types. In Muchea, buyers were eager but were eventually overwhelmed by a large offering this week.
The National Mutton Indicator this week saw a 43¢ decline to 332¢/kg cwt. The discount of Mutton to trade lambs currently sits at 57% (Figure 2), so mutton remains good buying for the processors, which is shown in the slaughter data. In the first 6 weeks of the year, lamb slaughter remains on pace with the 2024 start at 2.6 million head, whereas sheep slaughter YTD is 7% higher than in 2024. So, the growing processing capacity is currently being fulfilled by cull sheep, which has contributed to seasonal conditions and supply to push lamb prices lower in February thus far.
Mutton discounts a sponge for slaughter capacity
Next week
A shift in fortunes on the weather front, particularly in Southern sheep regions, should tighten the tap on sheep turnoff and correct the split between lamb and sheep headed to slaughter. March looks more promising for above-median rainfall than the rest of February in the South.
The capacity upside would push overall lamb market values higher, which will be required to get bang for the buck on the lighter lambs that were sent back to the paddock over spring.
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Data sources: MLA, BOM, Nutrien Ag Solutions, Mecardo
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