Insights June 2022
Insights June 2022
- Lamb prices in eastern Australia have been volatile in the past month but have started to slowly trend upwards while mutton prices strengthened considerably, and Western Australian prices recovered.
- Lamb and sheep slaughter improved from the lows of April which translated into improved export volumes in May.
Australian lamb prices will take direction from supply in the next month before rising later in winter.
Volatility remained a theme for Australian lamb prices in the last month. The Eastern States Trade Lamb Indicator (ESTLI) has ranged between 774-826c/kg since the start of May. Amidst the rises and falls, the overall trend has been a slow rise with a ESTLI averaging 806c/kg in the first half of June, up 2.6 per cent from the May average. Prices in Western Australia have staged a welcome recovery in recent weeks. The Western Australian Trade Lamb Indicator (WATLI) briefly returned above 700c/kg in late May. This is a strong recovery from a low of 533c/kg in mid-May, but still a 13 per cent discount to the ESTLI. Mutton prices also strengthened in the past month. In mid-June, the National Mutton Indicator (NMI) hit 650c/kg for the first time this year. This places the NMI 16 per cent higher than a month ago and on par with the same time in the last two years.
Lamb and sheep slaughter have both trended upward in the last month. The first week of June saw lamb slaughter reach its highest point since October 2020 and sit 6.2 per cent higher year-on-year. Sheep slaughter was likewise higher year-on-year, up by 32.6 per cent in the first week of June.
Increased production was met by strong demand across most export markets. Australian lamb exports rose by 22 per cent from May and were up three per cent year-on-year. The strongest growth market in May was Papua New Guinea which took 10 per cent of Australian exports for the month. Strong growth was also seen to the US and South Korea. Exports to China rose to their largest volume since November but were still down 40 per cent compared to a year ago. Mutton exports rose by nine per cent in May to sit 24 per cent higher year-on-year. Growth was led by China, Singapore and Malaysia which offset weaker US demand.
Lamb prices will largely take direction from supply in the coming month as underlying export demand is set to remain robust. Lamb supply typically declines throughout winter which subsequently drives higher prices. However, lower than expected supply in year-to-date suggests there may be more lambs still to come to markets in the next few weeks. As such, supply could remain high for the remainder of June and place downward pressure on prices. Supply is then expected to wane and ease pressure on prices. Mutton prices have so far resisted downward pressure of increased supply and could remain firm in the coming month as supply eases.
Source: Meat & Livestock Australia