Sheep supply flush working through as market finds support

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Store lamb prices hit a low for February at the start of this week, but buyers became more active as the week progressed and prices managed to improve. Reports from key saleyards suggest, there was a drop in saleyard lamb and sheep throughput as numbers were cut due to cheaper values, but there’s plenty of mutton on the kill floor.

The Eastern States Trade Lamb Indicator (ESTLI) lost 7¢ over the week due to weaker competition, finishing Thursday at 740¢/kg cwt. In the West, trade lambs have been trending weaker since January. This has continued with the WA trade lamb indicator dropping another 16¢ to 573¢/kg cwt, which is 264¢ (-31%) lower than the same time last year.

Heavies are still holding steady, with the National Heavy lamb Indicator moving 3¢ higher week on week, to settle at 797¢/kg cwt, up 37¢ (5%) year on year.

The restocker market moved similarly in both NSW and Vic, with the indicators lifting across the week. The National Restocker Lamb Indicator gained 31¢ week on week to 648¢/kg cwt as the young lamb supply tightened. Merino lambs also found more strength with the indicator lifting 43¢ to 653¢/kg cwt.  This is 54¢ below where the National Merino Lamb Indicator was sitting at this time last year. Light lambs also gained 21¢ to 648¢/kg cwt, which is 162¢ (-20%) lower year on year.

After last week’s steep price fall, mutton ended this week 13¢ higher at 330¢/kg cwt. This is still within the lower end of the range we’ve seen mutton priced since the start of this year.

Lamb and sheep throughput were fairly steady in the previous two weeks, with around 176K lambs and 122k sheep moving through saleyards. For the week ending the 17th of February processors were running slightly below the levels of the prior two weeks. Combined sheep and lamb slaughter of 459,650 head was 4% below the week prior, but only just shy of five-year average levels. There was a shift on the chain last week though, with fewer lambs on the hook, replaced by more sheep. With 178,929 sheep processed in total for east and west over the week, this was the highest weekly sheep slaughter we’ve seen since 2020.

The week ahead….

With the AUD finding its way back to the lows of early January at 0.68 US¢, finished lamb and mutton will be looking like good buying for our overseas customers when compared to levels seen previously over the last month. This should help to stimulate some demand while the exchange rate remains favourable to buyers.

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Data sources: MLA, Mecardo

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