Insights October 2024

Commodity Overview

• Lamb prices have softened throughout September. The market is expected to face continued downwards pressure from the influx of new season lambs over the next few weeks.
• Sheepmeat export volumes have been strong throughout 2024. Growth in volumes to the Middle East are more than accounting for the decline in volumes to China.

The Australian lamb market eased over the past month, with the increase of new season lambs weighing on prices. The National Trade Lamb Indicator (NTLI) finished September at 767 c/kg. This marks a decline of 42 cents (-5.1 per cent) from the start of the month but up 77.9 per cent from this time last year. Supply of old season lambs has dwindled since processors slowed to complete winter maintenance. While demand has not been able to keep up with the increased supply of new season lambs. Restocker demand and trade interest has been subdued due to dry conditions in southeast Australia. 

Lamb processing rates have eased following the winter slowdown, as the supply of old season lambs continues to tighten. Lamb slaughter averaged 413 thousand head per week throughout September. This was down 1.6 per cent from August and down 8.4 per cent from September last year. This marks the fourth consecutive monthly decline in average weekly lamb slaughter. Processing rates peaked in May but have since fallen 18.2 per cent as supply tightened. Lamb yardings have been steady, with the weekly average up only 0.8 per cent from August. The next three months usually sees a lift in supply as the spring flush brings new season lambs onto the market. Dry conditions during joining and lambing is likely to reduce the number of lambs available compared to recent years. The dry conditions will also extend the timeframe for lambs to meet target weights.

Lamb prices are forecast to continue lower over the next few weeks, facing downwards pressure from the influx of new season lambs. Dry seasonal conditions across southern Australia are expected to limit demand in pasture regions. Recent frost events have led to an increase in crops being cut for hay. This may bring more trade buyers in to take advantage of the increased feed they now have available. There is also downwards pressure from export markets who have shown resistance to the increase in saleyard prices.

Source: Meat & Livestock Australia

Mutton markets have fallen over the past few months. The National Mutton Indicator fell 72 cents from the start of September and is now 38.8 per cent below the five-year average. Mutton markets have come under pressure from increased supply, as growers look to turn off old stock as lambs are weaned. Sheep slaughter averaged 206 thousand head per week in September, up 31.7 per cent from August and 32.7 per cent from September last year. September marked the first time that average weekly slaughter exceeded 200 thousand head since November 2019. Processors appear to be taking advantage of the comparative strength in mutton export markets. This has led to a shift towards a higher ratio of sheep to lamb slaughter. Sheep yardings have also lifted, increasing 11.9 per cent month-on-month. Supply is expected remain elevated throughout October as growers continue to wean lambs and turn off old stock. Although increased export demand is providing some support to the market. Mutton prices are expected to continue sideways to marginally lower over the next few weeks.

Australian sheepmeat export volumes are continuing at record pace in 2024. Year-to-date lamb exports are tracking 21.8 per cent ahead of last year and are 34.2 per cent above the five-year average. Mutton exports have followed a similar trend, up 14.9 per cent from 2023 and 31.4 per cent above the five-year average. Growth in export volumes comes on the back of record production and slaughter rates over the past 12 months. However, there has been a shift in the main destinations for Australia's sheepmeat. The Middle East has been the major growth market in 2024, with the graphs below showing the jump in volumes following quieter years in 2021 and 2022. Export volumes to the US have also bounced back following a quieter 2023. Exports to the US slowed as tough economic conditions in 2023 limited demand for premium meats. China has been the major outlier this year, with export volumes falling from the records set in 2023. Export volumes to China have slowed as the country faces challenging economic conditions reducing demand through the food service industry.

Source: DAFF