Plenty left in the price tanks for lambs in 2025?

With spring having been hit and miss for many sheep-producing regions, finished lambs have been in hot demand by processors and later coming to the fore than usual. The flip side of that, however, is of course there are plenty of sheep being sent for slaughter, and the mutton price is telling of this.

Last week the Eastern Trade Lamb Indicator averaged 883¢/kg, up 17% for the five-year average for the corresponding week, and 27% stronger than year-ago levels. In fact, it was the highest price on record for that particular week, surpassing 2021. The national price for trade lambs wasn’t quite as strong, but at 817¢/kg was still 12% above average. Traditionally lamb prices only head in one direction from now through to the start of the new year, and the average price remains above this-week levels through until late winter the following year. This is supported by forward pricing we have seen, which is at 800¢/kg come February, with processors hoping to get plenty locked in at close to current rates.

Meat & Livestock Australia’s latest industry forecast has lamb slaughter dropping next year, by about 1.4 million head, which in itself should bode well for prices come 2025. Sheep slaughter, on the other hand, is set to head in the other direction by about 1.3 million head, as the flock turnoff phase comes further into fruition. Mutton prices are already struggling against supply, with last week’s average back to 2015 levels – the lowest it’s been since if we disregard the anomaly of last year’s unprecedented market crash. Looking to 2015-16 as we have often this year, the mutton indicator stayed at the same or below the current rate right through until winter. Mutton prices since July are averaging 344¢/kg, while for the 2015-16 season, they averaged 317¢/kg, indicating that if the sheep turnoff eventuates as forecast there could be room for downward movement.

That said, some pundits are pointing to the high sheep throughput of this year – the weekly average MLA reported slaughter number was 20% higher than last year’s – to indicate that perhaps turnoff was accelerated by the poor seasonal conditions in 2024, and there won’t be quite as much sheep supply as expected come the new year.

Confidence surveys of late seem to be dictated by when the rain has fallen. MLA and Australian Wool Innovation’s Sheep Producer Survey from September had sentiment swinging towards the positive, with 58% of producers on the plus side, while by Rabobank’s November survey, net confidence in sheep producers had dropped to -15%, down from +1% from the September quarter.