Insights June 2021
Insights June 2021
- Lamb and mutton prices increased in May and are expected to continue to rise during winter as supply tightens.
- Lamb slaughter rates are expected to decline through winter but remain higher than 2020.
- Export demand for Australian lamb should remain firm in the coming months as key markets such as the United States recover from COVID-19.
Australian lamb prices edged higher in May, after easing during most of April. The Eastern States Trade Lamb Indicator (ESTLI) recovered by four per cent in May and returned above 840c/kg. Despite the recent improvement, at the start of June the ESTLI sat 9.6 per cent below the same time last year. Mutton prices also improved in May. The National Mutton Indicator (NMI) rose by 6.6 per cent across the month and returned above 660c/kg. The NMI has kept closer pace with prices from a year ago, only down by three per cent at the start of June.
Support for higher lamb prices came from a decline in weekly lamb slaughter in the second half of May. Lamb slaughter in the week ending 21st May was 7.6 per cent lower than the first week of May. Despite a decline, lamb slaughter was higher year-on-year with average weekly slaughter in May 18.2 per cent higher than May 2020. Lamb supply likely to decline during winter but should remain higher than last year. Weekly sheep slaughter also eased during May, down 6.5 per cent from the end of April. Sheep supply has improved in recent months with average weekly slaughter in May 41.1 per cent higher than last year. Despite the year-on-year improvement, sheep slaughter was still 22.7 per cent below the 10-year average for May. Sheep supply is likely to remain below average during winter.
Stronger export demand also contributed to higher lamb prices in May. Lamb export volume increased by 19 per cent month-on-month and reached the largest volume since October 2019. Export volumes to the United States (US) continued to improve. Demand through foodservice outlets has rebounded quickly as COVID-19 restrictions have lifted. Lamb exports to the US in May were up 18.3 per cent from April and 90.6 per cent higher than May 2020. Demand from China also improved in May after a subdued start to 2021. Lamb exports to China in May were 52.9 per cent higher than April and 25.9 per cent above May 2020. Lamb exports to the Middle East remained weak in May as demand in the region is yet to recover. Year-to-date exports to the Middle East were 37.8 per cent below 2020. Mutton export volumes remained subdued by tight supply in May, down 5.9 per cent from April.
Lamb and mutton prices are expected to continue to steadily rise during winter as supply tightens towards a seasonal low. But improved supply this year may keep prices below the heights of winter price peaks seen in previous seasons. Recovering export demand should also offer support for high lamb and mutton prices as key markets recover from the impacts of COVID-19.
Source: Meat and Livestock Australia