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Insights March 2022

15 March 2022 |Sheep & lambs

Insights March 2022

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

Commodity Overview:

  • Australian lamb and mutton prices eased over the last month on the back of increased supply.
  • Supply is expected to increase in the next few months as stock held back over summer begin to make their way to markets.
  • Strong export demand and firm restocker demand could keep prices relatively stable in the face of rising supply.

Lamb prices drifted lower in eastern states over the last month. In early March, the Eastern States Trade Lamb Indicator (ESTLI) was 3.4 per cent lower than a month earlier and 3.7 per cent down year-on-year. It was a different story in Western Australia where trade lamb prices remained relatively steady and were 17.8 per cent higher than 12 months ago. The National Mutton Indicator (NMI) continued Its downward trend, falling 4.3 per cent month-on-month.

Prices came under pressure from increased supply and lamb and sheep slaughter improved over the last month. Eastern states lamb slaughter in the first week of March was 3.8 per cent higher than a month earlier and 9.8 per cent higher year-on-year. Sheep slaughter was likewise higher than a month ago, up 13 per cent, but 2.7 per cent lower year-on-year. Increased supply was an encouraging sign after processing capacity issues earlier in the year.

Slaughter rates are anticipated to continue rising over the next few months. Producers held stock back from markets in recent months due to supply chain disruptions. Good seasonal conditions also allowed lambs to be finished to heavier weights. This is expected to result in an influx of additional heavy lambs and sheep hitting markets over autumn.

The downward pressure placed on prices by further rises in supply will likely be mitigated by strong export demand. Lamb export volumes both increased in February with year-to-date exports up 7.5 per cent from last year. The US remained the driving force behind stronger export volumes with an increase of 14.6 per cent for the year-to-date. Papua New Guinea (PNG) has overtaken South Korea and the UAE to become Australia’s third largest lamb export market in 2022. Year-to-date exports to PNG are 41 per cent higher than last year. Lamb exports to China have had a slow start to 2022 with year-to-date volumes down 14.3 per cent and the lowest in the last five years. Mutton exports have remained subdued with year-to-date exports only 4.1 per cent higher than last year and 33 per cent lower than 2020. Exports to China, Australia’s largest mutton market, are down 17.3 per cent year-on-year. This decline was offset by growth to Malaysia and the Middle East.

In addition to strong export demand, prices will also be supported by firm restocker demand. Recent rainfall in south-eastern Australian sheep producing regions should bring greater restocker demand to markets. Producer confidence will also be boosted by a favourable rainfall outlook for autumn.


Source: Meat & Livestock Australia

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