Lamb prices continue to tighten

According to ANZ's latest Agri Commodity Report, prices are unlikely to rise sharply for some time, due to the strong recovery in national flock numbers.

Trade lamb prices eased 6c week-on-week as a result of easing processor demand, with the indicator reaching 634.35/kg carcase weight (cwt).

Prices at Ballarat eased but remain at a premium on the national average at 676.86/kg cwt.

Associate Director of Agribusiness at ANZ Alanna Barrett said to understand the causes of the price correction, it was important to look at the factors that pushed them up originally.

"2011 to 2021, global consumption of sheep meat grew by 21 percent, and as a long term and safe producer of sheep meat with a large exportable volume, Australia was a major beneficiary of this demand," she said.

"Even through the recent drought and stock liquidation, prices held firm, allowing producers to exit that drought period in a financial position that accommodated rapid restocking.

"To put that into context, producers have cumulatively added around 15 million head to the national flock since the lowest point during the drought, in just three short years."

"At the same time, growth in world economies, an outbreak of Swine Fever in China's pig population, and the return to good seasons, fed both local and international demand for sheep."

"At this point in 2023, flock growth has stabilised, reaching a point which some would argue is its sustainable limit."

Ms Barrett says while the supply of sheep and lambs would normally dip through the coming months based on trends of the past decade, the market largely anticipated that this may not occur this year.

"The fact that heavy and well finished lambs are attracting a significant premium above lighter and restocker lambs - when twelve months ago the latter were trading at equal to premium prices - could be taken as a strong signal that flock growth has stabilised, with far less demand for restocking demonstrated throughout the country," she said.

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Episode 3 market analyst Matt Dalgliesh said even though prices had tightened for lamb, offshore demand for mutton was still keeping those prices fairly strong.

"The big movers were Merino lamb and restocker and light lambs both down kind of between 40 to 70c and mutton rallied 50c," he said.

"Yardings have been stronger if you look at since we come back from the break in April for Easter and Anzac Day... I think processors are still working through some of their labour concerns.

"Certainly on the west coast there's been real issues around getting space for animals.

"On the east it's not as tight but it's not an easy kind of process just to get them in straight away so I think that's leading to some of this price pressure as well.

"This is probably the last little flurry of old season lambs coming through maybe that have just been caught at the end of the season."