Insights April 2021
Insights April 2021
- Australian lamb prices are historically strong and will likely remain supported in the short term due to tight supply as producer’s retain ewe lambs to rebuild stock numbers.
- Like lamb, mutton prices are anticipated to remain high due to tight supply.
- Export volumes are down year-on-year as lower exportable surplus and subdued international demand impact sheep meat sales.
The Eastern States Trade Lamb Indicator (ESTLI) was relatively stable during the month of March, ranging between 812-856c/kg. Prices are historically strong as restocker demand supports prices and supply remains tight. The ESTLI is currently very strong at 19 per cent above the five-year average, albeit 5.2 per cent lower compared to March 2020. Prices this time a year ago were at record highs due to the impacts of successive drought years on the east coast. Comparing current prices to the longer-term average helps put some context around the strength of current prices. The Western Australian trade lamb indicator increased by 1.8 per cent in March and is currently at a 16 per cent discount to the ESTLI.
Eastern states lamb slaughter increased in the first four weeks of March with average weekly slaughter up 4.2 per cent when compared to the equivalent period last year. Sheep yardings in March were 19.2 per cent below March 2020 due to recent flooding impacting logistics and reducing the number of sheep able to be transported to saleyards. As flood waters recede, yardings are expected to rebound as roads reopen and saleyards become more accessible. The lower supply in recent weeks has been supportive of prices, although price levels may ease as more lambs are turned off in coming months.
Australia is in a rebuilding stage for the national sheep flock following the drought years on the east coast. The national flock is forecast to reach 67.3 million head by mid-year. Producers are focussed on building their breeding stock and retaining ewe lambs, this will result in continued tight supply and strong demand for 2021. The national mutton indicator price has been steadily rising over the past two months and increased a further 5.1 per cent since the start of March. Current mutton prices are 7.0 per cent higher year-on-year and 35.8 per cent above the five-year average.
National sheep slaughter is anticipated to increase two per cent to 6.6 million head in 2021, primarily due to improved productivity due to adequate on farm feed. Year to date, sheep slaughter rates are tracking at a slower pace than 2020 with 1.2 million sheep slaughtered in 2021 compared to 1.5 million in the equivalent period last year. However, the slaughter rates of sheep and lamb are expected to pick up pace as winter arrives and producers capitalise on strong prices. Flock rebuilding will see supply remain tight and will keep mutton and lamb prices supported.
Australian sheep meat exports continue to trail 2020 pace due to tight supply limiting exportable surplus and subdued foodservice demand as a lingering impact of COVID-19. Consumer interest in cheaper protein sources and alternative proteins also continues to impact sheep meat demand. The positive is that protein demand is increasing in Asia, the Middle East and Africa which should support exports. Live export trade has reopened for Australian sheep and goats to the Kingdom of Saudi Arabia. The announcement follows a 10-year pause in exports and provides greater market opportunities for Australian sheep producers.
Source: Meat and Livestock Australia