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Insights February 2022

14 February 2022 |Sheep & lambs

Insights February 2022

14 February 2022 |Sheep & lambs
The February update provides an analysis of production and pricing trends for Australian sheep producers.

Commodity Overview:

  • Australian lamb and mutton prices declined in early February but remain well above long term averages.
  • Lamb and sheep slaughter increased in the last week and is set to rise further as processors recover from COVID-19 impacts.
  • Export demand for Australian sheepmeat was strong in January with the US continuing to be a strong growth market.

Australian lamb prices experienced some volatility at the start of 2022 but generally tracked at a similar level to the end of 2021. The Eastern States Trade Lamb Indicator (ESTLI) averaged 850c/kg in January but then fell 6.8 per cent in the first week of February. The National Mutton Indicator (NMI) averaged 587c/kg in January. This was seven per cent down from December and 1.8 per cent lower year-on-year. While prices have showed signs of decline recently, they remain high from a longer-term perspective. The ESTLI is still 34 per cent above the 10-year average while the NMI is 42 per cent above average.

Lamb and sheep slaughter was subdued in January. This was firstly due to the impacts of COVID-19 outbreaks on processor workforces which restricted capacity. Producers then opted to hold stock back from sale to avoid the resulting price volatility. Average weekly Australian lamb slaughter in January was 14 per cent lower year-on-year while sheep slaughter was down 12 per cent. The impacts of COVID-19 on processor workforces have begun to ease. This allowed slaughter rates to lift in the first week of February. The increase in supply likely prompted the decline in prices seen at the same time.

Supply is expected to continue increasing in coming weeks as producers sell sheep and lambs held back from sale in January in addition to regular February and March selling. Increased supply will likely put further downwards pressure on prices. However, this may be partially offset by improved demand from processors who should return to saleyards in greater strength.

Strong demand from export markets will continue to offer support to prices amidst rising domestic supply. Australian sheepmeat exports got off to a good start in 2022. January lamb export volumes were 25 per cent higher year-on-year and mutton exports were up 19 per cent. Demand from the US was particularly strong in January with a 35 per cent lift year-on-year for lamb. Lamb exports to the US increased by 16 per cent in 2021 and are set to increase again in 2022 on the back of lower US domestic production. US sheepmeat production is forecast to decline by 2.2 per cent in 2022, according to the USDA. This would continue a long-term decline in production and should continue to drive strong demand for imports. In addition to the US, demand from China, Malaysia and other smaller markets was also strong in January.


Source: Meat & Livestock Australia

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