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Insights May 2022

9 May 2022 |Sheep & lambs
Sheep

Insights May 2022

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

Commodity Overview

  • Lamb and mutton prices in eastern Australia declined in early April before recovering most of their lost ground by the start of May.
  • Slaughter rates eased during April and this translated into reduced export volumes to most major markets.
  • Australian lamb prices are expected to stabilise in May before rising during winter.

There was some volatility in Australian lamb prices in the last month. The Eastern States Trade Lamb Indicator (ESTLI) briefly rose above 800c/kg in mid-April before returning to around 780c/kg in early May, a similar level to a month ago. Mutton prices followed a similar trend. The National Mutton Indicator (NMI) returned above 600c/kg in mid-April before easing back to 580c/kg by early May. This places the NMI five per cent higher than a month ago but still seven per cent lower year-on-year. It was a different story in Western Australia where lamb prices continued to plummet in April. This is largely due to staff shortages continuing to impact the processing sector. Trade lamb prices in Western Australia fell to a low of 553c/kg in mid-April. This was nearly 300c/kg or 35 per cent below the highest point for the year in January. Prices have since recovered somewhat, returning about 600c/kg in early May but still at a significant discount to prices in eastern states.

Lamb and sheep supply was generally lower in April. Shorter working weeks due to public holidays reduced processing capacity for the month. This saw average weekly lamb slaughter for the month fall 6.3 per cent from March and sheep slaughter down 16.1 per cent. Supply is expected to increase in May before declining throughout winter ahead of the spring flush of new season lambs.

Reduced production in April translated into declines in sheepmeat exports. Lamb export volumes declined by 10.8 per cent month-on-month in April but were on par with April 2021. Papua New Guinea and South Korea, Australia’s third and fourth largest markets in 2022, recorded large declines in April of 31 per cent and 23 per cent, respectively. Despite a poorer month, volumes to these markets continue to track higher on a year-to-date basis. China was a rare market to which export volumes increased in April, with a 7.6 per cent rise from March. However, volumes to China continue to lag behind 2021 levels with year-to-date exports down by 23.1 per cent. Australian mutton exports also decline in April, down 16.7 per cent from March. However, April volumes were 6.4 per cent higher year-on-year. Stronger demand for mutton has come from Malaysia and the Middle East.  

Lamb prices are expected to stabilise in May. While supply may increase, the favourable rainfall outlook may encourage stronger restocker demand. Prices are then expected to rise through winter as in-line with the typical seasonal trend as supply wanes.

 

Source: Meat & Livestock Australia

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