Insights October 2023

Commodity overview

• The sharp decline in lamb prices has eased over the past month, with prices expected to stabilise throughout October.
• Lamb supply is likely to remain elevated as the spring flush will see yardings increase in Victoria until the end of the year.
• Consumer demand is returning as the drop in saleyard prices is slowly being passed onto consumers. Export volumes remain high despite reports of large volumes of frozen meat in storage.

Australian lamb prices are expected to stabilise over the next few weeks. Changes in seasonal conditions expected to be the main driver of prices. Prices had fallen sharply since the start of the year but have stabilised over the past few weeks. Some rainfall recently has seen lamb markets rally as restockers tentatively re-enter the market. The National Trade Lamb Indicator gained 39c/kg (+9.2 per cent) from last month but remains 285c/kg (-38 per cent) below this time last year.

Prices have faced downwards pressure recently from the high supply of lambs coming through the market. Lamb slaughter averaged over 451,000 head per week in September, up 19.5 per cent from last year and 28.3 per cent above the five-year average. This trend has been consistent throughout the year, with year-to-date lamb slaughter up nine per cent from 2022.

The high supply of lambs is expected to continue over the next few months. The forecast is for a bumper crop of new season lambs which will continue to flow through the market. Restocker demand has been reduced over the past few months due to the dry seasonal conditions and outlook. The recent rainfall has seen an uptick in demand however the forecast of a dry summer will continue to limit restocker confidence. The continued high supply and dry outlook will limit any significant uplift in prices over the next couple of months.

Domestic retail demand for lamb is starting to return as reduced prices at saleyards are slowly being passed onto consumers. Export volumes remain high as processors look to find a home for the additional product available. There was over 31,000 tonnes of lamb exported in September, up 25.9 per cent from last year and 35 per cent above the 5-year average. China and the US continue to be the major markets for Australian lamb. Exports to the US started the year slowly but have risen by 79 per cent over the past five months. Exports to China have returned to normal levels following a drop off in 2022.

Mutton prices continued to dip through September but lifted over the past week following recent rains. The National Mutton Indicator is down 26 cents (-15.8 per cent) from last month after falling to its lowest point since 2013 in late September. Prices have struggled with the surplus of supply, with weekly mutton slaughter in September up 47.2 per cent from last year. Mutton supply has surged as farmers looked to turn-off stock to manage feed availability. The increased supply of mutton has continued to flow into export markets. Mutton exports are up 47.1 per cent by volume so far this year, with China remaining the dominant market. However, reports of large quantities of meat in freezers is putting a dampener on prices. The supply of mutton is unlikely to slow over the next few months, which will maintain pressure on prices.

Source: Meat & Livestock Australia