Sheep and lambs continue to flow into saleyards and processors as we move through summer. Continued dry conditions through key southern sheep zones appear to be driving the strong turnoff. Here, we delve into the past to find when supplies might tighten.
We know that Western Australia has been in flock liquidation mode for some time, but in the east, the market is a little more balanced. East coast sheep slaughter remains stronger than last year but has weakened compared to late 2024.
Figure 1 shows sheep slaughter running 16% higher than last year in the first five weeks of 2025. The average weekly slaughter rate is, however, around 27% lower than the last two months of 2024. It is not unusual to see sheep slaughter start the year weaker than it finished the previous year
Spring and early summer supply is usually strong as cast-for-age sheep are sold as pastures decline. In late 2024, weak wool prices and the memories of an extra-long feeding season in 2024 might have seen more sheep culled than usual.
In looking for similar seasons, we went back to 2006-07, which was a particularly dry year in southern sheep zones. Figure 1 shows that 2006 had a remarkably similar slaughter pattern to 2024, albeit at a stronger level thanks to a larger flock.
In 2007 sheep slaughter remained high but was slightly lower than at the end of 2006. From February onwards, sheep slaughter tapered off quickly. A good autumn break in May saw sheep slaughter hit what were at the time, extreme lows.
On the lamb side, the slaughter space opened up by sheep has been well and truly filled by lamb. East coast lamb slaughter is back at the peaks seen in autumn 2024. It’s a little harder to compare lamb slaughter rates from nearly 20 years ago, as flock structure has changed significantly.
Figure 2 shows lamb slaughter peaking in February 2007 before falling into autumn. It is hard to see this happening again this year without a widespread break seeing lambs held on farms.
The tightening in sheep supply in 2007 had a significant impact on prices. Figure 3 shows the National Mutton Indicator (NMI) rallied through January and February and again in April and May. The NMI only returned to the prices of the previous winter, and it sat at around half the price of lamb.
What does it mean?
Applying historical trends to current markets can be informative, as producers tend to react the same way in similar situations. Differences in flock structure mean we need to be a little careful using the comparison.
Seasonal trends and the stage of the flock and season suggest mutton supplies could tighten sharply on a good rain. This should result in price improvement, but much depends on how lamb supply performs
Key Points
- Mutton supply is following a similar pattern to the dry years of 2006-07.
- In 2007, heavy slaughter was followed by a significant decline in supply.
- Differences in flock structure make price comparisons difficult, but strong mutton values could be expected with supply weakening.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: MLA, Mecardo
