Insights November 2024

Commodity Overview

• Australian lamb markets have been firmer over the last month and are expected to remain relatively steady through until Christmas.
• Export volumes have eased over the past few months following the slowdown in lamb processing rates. Recent ABS data is reporting that domestic consumer lamb prices have lifted since June.

Lamb prices have moved higher over the past month, gaining support from the reduced supply of new season lambs. The National Trade Lamb Indicator gained 35 cents (+4.5 per cent) to finish October at 808 c/kg. This marks a 68.4 per cent increase compared to this time last year and 7.3 per cent above the five-year average. The National Heavy Lamb Indicator has also moved higher, lifting 73 cents (+9.4 per cent) to finish the month at 845 c/kg. Dry conditions throughout southwest Victoria and southeast South Australia over the past 12 months has slowed the supply of finished lambs coming through the market. Restocker demand has also gained support from growers trying to salvage value from failed and frosted crops.

Australian lamb supply has started to pick up after a quiet few weeks in early October. Processing rates eased as the supply of old season lambs slowed and the reduced volume of new season lambs coming through. Lamb slaughter averaged 405.5 thousand head per week throughout October. This marks a 1.9 per cent decline from September and is down 8.2 per cent from October last year. Processing rates did start to pick up throughout the second half of the month and are likely to remain higher throughout November.

Lamb prices are expected to be steady through until Christmas. The supply of new season lambs is forecast to rise which will apply downwards pressure. Although this is likely to be lower and slower compared to previous seasons due to dry conditions in major lamb producing areas. Restocker demand is expected to be firm over the next few weeks. Traders and feed lotters will be looking to take advantage of the spread between the light lambs and finished lamb prices. The supply of ewes is also expected to tighten following high processing rates over the past few weeks. This may see processors have to shift their focus to a larger lamb kill.

Source: Meat & Livestock Australia, DAFF

Source: Meat & Livestock Australia, DAFF

Domestic demand for Australian lamb has grown in 2024. Recent ABS data showed that consumer lamb prices lifted 7.7 per cent in the September quarter. This was supported by the recovery of saleyard prices since September last year. Export volumes have been on a downwards trend since May, falling 27.3 per cent over this period. Australia exported 26.7 thousand tonnes of lamb in October, which was the lowest monthly export volume since January this year. This decline has followed the fall in processing rates as the supply of finished lambs dwindled. Year-to-date export volumes remain strong, with 303.9 thousand tonnes exported so far in 2024. This marks a 13.7 per cent increase from last year and 29 per cent above the five-year average. Export growth has been driven by strong volumes to Middle East and the US, which are up 62.4 per cent and 32.5 per cent.

Australian mutton prices have strengthened over the past few weeks. The National Mutton Indicator (NMI) gained 30 cents (+10.4 per cent) throughout October to finish at 320 c/kg. At this level the NMI is almost three times higher year-on-year but still sitting 32.8 per cent below the five-year average. Mutton markets have found support as processors have shifted their focus to sheep due to the reduced supply of finished lambs. Sheep slaughter averaged 219.8 thousand head per week in October, up 6.6 per cent from September and 46.7 per cent from October 2023. The week ending 25th of October saw 246.5 thousand head processed, the largest recorded sheep slaughter since December 2006. Mutton export volumes have strengthened on the back of increased processing rates. Mutton exports totalled 27.2 thousand tonnes in October, up 24.7 per cent from September and 34.8 per cent higher than this time last year. The recent increase in mutton exports has been led by growth to China. Mutton exports to China were up 47.4 per cent from September and more than double the volumes exported in August this year. Mutton markets are expected to be relatively stable over the next few weeks. Prices will be supported by the tightening supply picture for sheep. However, they will face pressure as increased supply of new season lambs will see processors shift focus away from mutton.

Source: Meat & Livestock Australia, DAFF

Source: Meat & Livestock Australia, DAFF