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Insights November 2021

9 November 2021 |Sheep & lambs

Insights November 2021

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

Commodity Overview:

  • Australian lamb and mutton prices trended lower in October on the back of increased supply.
  • Further declines in price are expected in November as supply continues to rise to a seasonal peak.
  • Strong export demand, particularly from the US and China, should continue to offer support for prices.

Australian lamb prices declined in October after falling just short of record highs in August and September. The Eastern States Trade Lamb Indicator (ESTLI) has fallen 11.7 per cent over the past month and returned below 850c/kg for the first time since June. Price declines were less severe for light and restocker lambs which fell by 3.3 per cent and 3.6 per cent, respectively. Meanwhile heavy lambs recorded a 14.5 per cent decline in price. Despite falling during October, the ESTLI was 4.7 per cent higher than 12 months ago and 12 per cent above the five-year average.

Lamb prices declined in October primarily under the pressure of increased lamb yardings. National weekly yardings increased by 20 per cent during October. Victoria and South Australia drove the increased yardings in October with rises of 47 per cent and 49 per cent, respectively. Lamb prices are expected to come under continued pressure as supply increases through to the end of the year. The five-year average trend shows national yardings rise 29 per cent from the end of October to late in December. This rise is largely driven by a 92 per cent rise in Victorian yardings.

While yardings have trended higher, weekly slaughter rates declined during October. Weekly lamb slaughter in eastern states in the final week of October was 12.8 per cent lower than the start of the month and 16.4 per cent lower year-on-year. A decline in slaughter at this point of the season is surprising as supply is usually ramping up. Reduced slaughter in New South Wales in the final two weeks of the month drove the overall decline.

Lamb export volumes declined for a fourth consecutive month in October. October volumes were 9.7 per cent lower month-on-month and 18.3 per cent down on 12 months ago. Exports to China and the US recorded the largest declines in October with falls of 13.5 per cent and 10.7 per cent, respectively. Reduced supply through winter has been the limiting factor behind the downward trend in export volumes. However, there are indications that underlying demand is strong, particularly in the US. Resurgent foodservice demand, limited import supply and competition from China has led to US lamb storages declining and prices for domestic and imported lamb well above levels from 12 months ago.

Mutton prices continued to trend lower in October on the back of increased supply. Average weekly slaughter in October increased 19 per cent from September, with rises of over 20 per cent in both New South Wales and Victoria. Despite the rise, sheep slaughter was 17.5 per cent below the 10-year average. In response to increased supply, the National Mutton Indicator (NMI) started November at 569c/kg, 11.2 per cent lower month-on-month. The NMI dipped below 600c/kg for the first time since January. On average, sheep slaughter increases by eight per cent from October to November. Such a rise which would put further downward pressure on prices. However, strong demand from China and the US should continue to offer plenty of support to mutton prices.


Source: Meat and Livestock Australia

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