Kelly Country: Why sheep is the new best thing

Processors are keeping a tight rein on spending, favouring cheaper meats like mutton for slaughter, amid a sharp rise in lamb prices. See the latest.

The mutton and hogget markets have benefited from the sudden and sharp rise in lamb prices this month with signs processors have begun to allocate more kill space to these cheaper meats.

Slaughter figures published by Meat and Livestock Australia show the NSW mutton kill has had its strongest start to a New Year in more than three seasons.

The renewed focus on mutton is being mirrored by a consistent price run for sheep with carcass values steadily rising and not as volatile as lamb.

Sheep production in NSW during the first full week of January – the latest available data – was listed at 64,000 head to be nearly double the 37,000 processed the same time last year, according to Meat and Livestock Australia.

As a comparison, the lamb kill in NSW during the first production week of January this year only lifted marginally on 2023 levels, going from about 90,000 lambs to 106,000 lambs.

The trend to mutton is not as stark in the southern states where some of the big processors tend to forward buy more lambs at locked-in prices and arguably had their kill positions better covered.

The mutton and hogget markets have benefited as processors allocate more kill space to these cheaper meats. Picture: Zoe Phillips

But the change in buying pattern from some processors – swapping lambs for mutton or hoggets to get meat into chillers below the ruling rate of 700c/kg for good lambs – can be seen when you follow markets and is being talked about among buyers.

While producers don’t like to hear it, there is some pressure on lamb to remain price competitive against other meats and viable into key export destinations. The situation is being helped domestically by the fast rise in beef prices this January.

But more than one processor has told The Weekly Times a key driver behind the lift in lamb kills last year was the lower price point for the product which made it easier to sell both here and overseas.

They said it was telling that the biggest gains in the export market were to price sensitive destinations such as China and the Middle East and Africa.

Last year was a record year for lamb and mutton exports from Australia.

China was the biggest buyer, with lamb sales to this country lifting by 30 per cent in 2023 to 67,763 tonnes while mutton sales surged 70 per cent to reach nearly 97,500 tonnes. In its wrap of the production year MLA pointed out that China held a big market share of 31 per cent of all mutton exported from Australia.

The Middle East and North African markets, collectively referred to as MENA, was the other destination to record big growth, purchasing 63 per cent more lamb and mutton in 2023 after a dull year in 2022 when price points for Australian product were much higher.

Anecdotally, it is processors which were aggressively chasing light MK ‘bag lambs’ which appear to have slowed down the most and are looking at other options to fill chains.

Observing sales such as the Bendigo prime market on Monday, 700c/kg for lamb seems to be the point some processing orders start to drop off. But at this stage of the season, with limited numbers of good quality slaughter lambs coming through the auction system, buyers haven’t been able to effectively flatten the market.

Instead sales have become erratic, as evidenced by falls of up to $30 a head for lambs at Wagga Wagga last week compared to gains of $10 to $20 for the best crossbred heavy lambs at Bendigo.

Moving forward, buyers said February could be the real test as school resumes with all its costs and families try and recover from the expense of the summer holidays and Christmas. It is an old fashioned argument in lots of ways, but shows how price and consumer sentiment is very much at the forefront of buyer conversations.