What are we putting in the budget for lamb?

Sheep muster in outback Queensland near Charleville.

It’s tax planning and budget time. A question we get every year is ‘what should I put in the budget for lambs? It’s not quite opaque as ‘how long is a piece of string?’, as we do have some fundamental information to use to have a crack.

Trying to forecast a range for spring and summer lamb prices at the end of May requires the use of many assumptions. We have an idea of where demand is sitting, and it’s relatively strong.  We also have some idea of how many breeding ewes are out there. 

Scanning rates have been very strong in key lamb producing areas in South West Victoria and South East South Australia, but the dry autumn could impact how many of these lambs are marked.  In northern lambs areas we are likely looking at something similar to last year in terms of lamb supply, based on recent experience, it could be 10% either side.

Apart from supply, one of the main differences this year is slaughter space. Since the very cheap lamb prices of last spring, processors have increased slaughter space, and partially one of the bottlenecks in the supply chain. This means that saleyard prices should better reflect export values this spring.

Figure 1 shows the increase in slaughter space.  Only in late November did slaughter space move near 600,000 head last year, and we’ve seen it six times this year, and a new record of 606,852 head a fortnight ago. We still seem to be working through peak lamb supply.

With increased slaughter space, and seemingly strong demand, the factor which could see prices lower than current levels in the spring will be supply. 

Last spring was relatively dry, which led to more lambs hitting the market than processors could cope with. In a normal spring lamb supply is spread out more.  Let’s hope we get a normal spring.

The dry autumn in some areas could see somewhat delayed spring lamb supply this year. Tight pasture conditions could see a dearth in early suckers, with many lambs weaned early to manage feed supplies.

What does it mean?

If we are looking at September onwards, the range of lamb prices should be a low around recent levels of 600¢/kg cwt (red line on figure 2), and possibly as high at 800¢ if supply is tight.  Strong export demand and an increase in slaughter space relative to last year should keep a floor in the market.

The obvious caveat is that a repeat of a dry spring and forced selling could see values weaken, although the lows of 2023 are unlikely to be repeated.

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Key Points

  • It’s time for 2024-25 budgets, and producers will be hoping for stronger lamb prices.
  • Increased slaughter space and strong export demand should support spring values.
  • Normal spring rainfall should see more uniform supply and price lows around autumn values.

Click on figure to expand

Click on figure to expand

Data sources: MLA, Nutrien, Mecardo

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