The term ‘off the charts’ is commonly used to describe all sorts of results, be it the price of gold, hype around Collingwood, or interest in Morwell court cases. In recent times lamb, and to a lesser extent mutton, prices have been literally ‘off the charts’, forcing analysts to adjust the y-axis on their excel charts. Will we have to do it again this winter?
Price rises of the sorts we’ve seen in lamb markets in last month are not all that rare. We saw a similar rise, albeit from lower levels in the summer of 2023-24, and again in the winter of 2024. Figure 1 shows that in the winters of 2018, 2019 and 2020 we saw rapid price rallies, all of which lost much of the rally by the following spring.
Regular readers will know we have been talking about the 2019 season as a guide to price movements this year for some time. There are plenty of similarities between 2019 and 2025.
Drought in key sheep zones has weakened the lamb crop, and primed the flock for a rebuild when pasture levels recover. Export lamb markets are strong, and beef prices are at all time highs at export and retail level. Strong beef prices mean lamb demand at domestic retail level will still be ok.
This leads to competition at the heavier trade lamb end between supermarkets and domestic processors, and export processors. No doubt this helped add nearly 100¢ to the trade lamb indicator last week.
The much talked about forward contracts released back in mid-May are instructive as to how processors see market playing out. The top prices of 980-1000¢/kg cwt have been left behind by the spot market but it’s the trend processors were expecting we are interested in.
With forward contracts rising out to August, it looks like a least some processors are expecting lamb supply to remain tight right through to the end of winter. In 2019 prices played out in a similar way, albeit coming off in August after a peak in late July. In 2018 the market kept rising, peaking in late August.
What does it mean?
Lamb prices north of 1000¢ aren’t going to last. There will be a rush to get new season lambs to weight to take advantage of high values, and a rush to sell when the market starts to ease. When this happens is the hard part. The tough season and the drive to keep females has us leaning towards a later decline, with prices remaining strong through July and August.
Key Points
- Record high lamb prices have hit earlier than usual, with timing similar to 2019.
- Winter price premiums tend to disappear in late July and August, but forward contracts suggest markets will remain strong.
- Delayed new season lambs and flock rebuilding might push price declines out to September.
Data sources: Mecardo; Meat & Livestock Australia;
