sheep in front of sheering shed

Supply was very reactive to the conditions this week as lamb numbers scaled back in response to the market opening last week. At the same time, the shine on the mutton market wore off.

Despite the decline in supply, the market is still keen to retrace some ground from the December highs. Processors aren’t shying away, as we saw 470K lambs processed last week per the NLRS. This level of demand will support the job while the later spring lambs are cleaned out.

The Eastern States Trade Lamb Indicator (ESTLI) lost 10¢ to 800¢/kg cwt despite the drawback in supply seen at the yards this week compared to last. With the market reverting to price levels seen in November as opposed to the highs of December, there was a notable decline in the throughput of stock that qualified for the trade lamb indicator at the yards this week (39% lower week on week). Trade lambs improved 30¢ to 789¢/kg cwt in WA (WATLI) and are closing the gap on the East Coast (See Figure 1).

An influx of sheep to the yards after mutton’s miraculous start to the year saw the pricing momentum collapse for the National Mutton Indicator which finished 74¢ lower to 359¢/ck cwt. Volatility is nothing new for mutton markets, but the market remains 65¢ higher than this time last year.

Angus Brown took a look at the impact of growing slaughter capacity and what that could mean for short-term supply into the processing sector for Mecardo this week (read more here).

It looks like producers prioritised growing lambs on the last of the spring feed and sold sheep in November and December. This saw a supply squeeze on lamb causing a boom in prices for the last fortnight of 2024.

Next week

Restockers in eastern sheep regions are probably not that impressed with the rain gauge over the Christmas break. This will mean the processors will have the added luxury of being a bit pickier than in December. This will continue to impact lambs that are at the tail-end of quality at the yards, for the next few weeks.

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Data sources: MLA, BOM, Mecardo

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