Supply strength challenges the status quo

Aerial drone photo of sheep in Winilippe Yards KondoolkaStation , SA by Stefanie Roeske

A notable mix of quality at saleyards is causing an erratic market and dragging down lamb price indicators. Supply to processors is far exceeding seasonal norms, making its impact felt. While the market may appear unpredictable, we know that its supply in the driving seat.

The Eastern States Trade Lamb Indicator (ESTLI) lost 9¢ over the week to end at 586¢/kg cwt. This is 27% below the five-year seasonal average and close to the levels we saw at this time of year back in 2018. In the West, trade lamb prices improved by 22¢ over the week to 471¢/kg cwt.

Heavy lambs continued the downward trend in NSW, held steady in Victoria, and improved slightly in SA. The National Indicator ended the week at 652¢/kg cwt, a very healthy premium above trade lambs.

Restocker lamb prices improved in WA and SA but lost ground in NSW, Vic, and Tas. Restocker lambs in Victoria commanded a strong premium over NSW this week, at 555¢/kg cwt while in NSW restocker lambs traded at 483¢/kg cwt. Merino lamb prices continued to sit on the see-saw, this week on the down run losing 46¢ at a national level to 488¢/kg cwt.

Turbulent is the best word to describe the mutton market at the moment, with large swings in price the new norm. This week the National Mutton Indicator pushed back above the 400¢ mark, after gaining 51¢ over the week.

Slaughter levels remain elevated. For the week ending the 19th of May, lamb slaughter in the east was 386,201 head which is 11% higher than the five-year average for this point in the year. Add to that, the surging sheep supply, which last week was 139,812 head, it’s no surprise that processors are packed.  Eastern sheep slaughter last week was 70% above the five-year average which is 57,000 head higher than the five-year seasonal average. 2014 was the last time sheep slaughter was at these levels in May.

Producers are clearly not content with the recent move lower in the market. For the week ending the 19th of May, saleyard lamb throughput dropped 34% in the east, and mutton 54%. Numbers also pulled back in WA, but not to the same degree. Early reports are showing a lift in yardings this week.

The week ahead….

The AUD has slipped back to 0.65 US¢ which will be making Australian sheep meat look very attractive to overseas buyers at current levels. With the US grilling season just around the corner, export markets might be the source of support needed to soak up the extra supply of finished stock.

Have any questions or comments?

We love to hear from you!
Print This Post

Click on graph to expand

Click on graph to expand

Click on graph to expand

Data sources: MLA, Mecardo

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!
Sheep

Winter lamb cool down

Lower throughput for lambs indicates the approach of winter. Whilst lamb indicators were lower, mutton markets found some favour this week, improving week on week

Read More »
Sheep

Mutton market still out of step

The mutton market has held fairly steady throughout the autumn, but it hasn’t experienced the same rebound as lamb in recent weeks. The national mutton

Read More »
Sheep

Buyers are back baby

The lamb and sheep markets were back in full swing following last week’s shorter selling week. Most notable were the buyers, pushing prices up across

Read More »

Want market insights delivered straight to your inbox?

Sign up to the mailing list to get regular updates to new analysis and market outlooks

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
Listen to the podcast

Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.

Photo of a farmer surrounded by Merino sheep in dusty yards
Research: Analysis of the Australian sheep flock

In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making. 

Image of harvested grain pouring into a chaser bin
SERVICES AND CAPABILITIES STATEMENT BROCHURE

We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.