Lamb prices may have reached winter peak early

Heavy lamb prices have fallen 30c/kg-40c/kg in a week, with experts and agents citing issues at the processor level.

Big heavy lambs at Ballarat.

Labour shortages for processing factories later this year could be behind an early winter peak in lamb prices according to industry experts.

The winter price peak for heavy lambs, which normally comes around late August to early September, could have come early this year with the heavy lamb indicator topping at 947c/kg last week — the highest it’s been since early March 2020 and 27 per cent higher than this time last year.

Thomas Elder Markets commodity analyst Matt Dalgleish said a possible lack of the casual, international work force the industry normally relies upon during the spring lamb flush each year could have brought forward the price peak.

“This year there’s a lot of chatter that those workers aren’t available so that is causing concern that there could be a few bottlenecks at the processors in late September and November.

“That will flow through to pressure at the saleyards if those processors that normally buy the big volumes are not available,” Mr Dalgleish said.

The eastern states heavy lamb indicator closed at 919c/kg on Monday having fallen slightly since last week’s suspected peak. But it is still 287c/kg higher than the same time last year.

Meanwhile, the eastern states trade lamb indicator was at 879c/kg, down 43c/kg from last week.

Mr Dalgleish drew parallels to the similarly early price peak last year resulting from restrictions processors faced in throughput due to Covid-19 lockdown.

Mr Dalgleish said the market could be reacting in a similar fashion to last year so as to not overwhelm the supply to processors.

“The price could be the signal processors give to adjust the supply — if they start paying less than farmers might decide to hang onto their lambs for a bit and the market can work efficiently,” he said.

“It is common to see the price come off a little bit when the spring flush comes through but if there is a bottleneck and a labour issue then that price decline could be exacerbated,” Mr Dalgleish said.

Rodwells Bendigo livestock manager Nick Byrne said week on week prices for heavy lambs at the Bendigo sheep sale on Monday were “considerably cheaper” but last week’s market reflected what Mr Byrne also considered to be the winter price peak for heavy lambs.

“Last week we had a big step up in the order of $15 to $20 in some places and we lost that again (on Monday),” Mr Bryne said.

This week Mr Byrne said prices were similar to a fortnight ago with heavy lambs returning from $270 to $275 on average, down from the $300 average last week.

“I’m hearing the same rumours that processor kills will be dictated by the amount of staff they can get a hold of as opposed to the sheep they can source.”

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