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Insights May 2021

11 May 2021 |Sheep & lambs

Insights May 2021

11 May 2021 |Sheep & lambs
The May update provides an analysis of production and pricing trends for Australian sheep producers.

Commodity Overview

  • Lamb and sheep prices eased in April but are expected to trend higher in the coming months as supply declines toward seasonal lows in winter, albeit not to the same lows of winters in the last two years.
  • Australian sheepmeat exports for the year-to-date have lagged behind 2020 volumes but demand could improve in key markets such as the United States and the Middle East.

Australian lamb prices continued to ease in April. The Eastern States Trade Lamb Indicator (ESTLI) has now fallen 6.2 per cent from a recent peak in late March to sit just above 800c/kg. The ESTLI is currently 8.7 per cent below the same time last year, but is still at a level, 12.9 per cent above the five-year average. Mutton prices similarly eased during most of April with the National Mutton Indicator (NMI) falling 9.5 per cent from a spike in early April. The NMI remains very strong, on par with this time last year and 27.2 per cent above the five-year average.

The main culprit behind easing prices in April was a lift in supply. Lamb slaughter in the last week of April was 20.5 per cent higher than a month earlier while yardings were up 32.6 per cent. Lamb slaughter and yardings were also higher than the same week last year by 19.2 per cent and 30.6 per cent, respectively. Lamb supply is expected to begin to decline towards a seasonal low in winter but should remain close to five-year average levels. Sheep supply meanwhile can still be categorised as tight with slaughter in the last week of April 16.2 per cent below average and yardings 12 per cent below average. However, sheep supply has improved from this time last year: slaughter was up 42 per cent and yardings were 22.9 per cent higher.

Stronger demand from restockers is providing support for lamb and sheep prices at very high levels despite the improvements in supply. After a slow start to the year, export volumes are closing the gap to volumes from a year ago. The volume of lamb exports in April was only 3.7 per cent per cent lower year-on-year while mutton exports were down only 0.3 per cent. The United States (US) is showing signs of improved demand with lamb exports in April up 17.2 per cent year-on-year and mutton up 51.4 per cent. Demand from the US is expected to continue improving as the foodservice sector rebuilds momentum following the impacts of COVID-19. Lamb exports to China have been subdued, with April volume down 33.2 per cent year-on-year, while mutton exports to China fell 38 per cent month-on-month in April after a strong first quarter. Demand from the Middle East remains weak with April lamb exports 34.1 per cent lower year-on-year and mutton down 50.9 per cent. An improving global economy is providing an optimistic outlook for Middle Eastern demand which could be pivotal to strengthening overall demand for Australian sheepmeat later in the year.

The price outlook for lamb and mutton prices is positive over the coming months on the back of potential improvements in export demand and as lamb and sheep supply trends toward seasonal lows in winter. However, lamb prices are not expected to rise as to the same heights as the last two years when tight supply produced a gap between old and new season lamb supply.


Source: Meat and Livestock Australia

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